UNITED STATES ANTIMONY CORP - Annual Report: 2019 (Form 10-K)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-K

 

☑	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended: December 31, 2019
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                      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 under Section 12(b) of the Exchange Act:
Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

 

Securities registered under Section 12(g) of the Exchange Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.01 par value	UAMY	NYSE American

 

Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☑

Indicate by checkmark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, 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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer	☐		Accelerated filer	☐
Non-accelerated filer Emerging Growth Company	☐ ☐		Smaller reporting company	☑

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☑

The aggregate market value of the registrant’s common stock held by non-affiliates was $34,673,569, based on the reported last sale price of common stock on June 30, 2019, which was the last business day of the registrant’s most recently completed second fiscal quarter. For purposes of this computation, all executive officers and directors were deemed affiliates.

 

The number of shares outstanding of the registrant's common stock as of April 14, 2020: 69,661,436 shares.

 

 

UNITED STATES ANTIMONY CORPORATION

2019 ANNUAL REPORT

 

TABLE OF CONTENTS

 

 

	PART I
ITEM 1.	DESCRIPTION OF BUSINESS	1
ITEM 1A.	RISK FACTORS	4
ITEM 1B.	UNRESOLVED STAFF COMMENTS	5
ITEM 2.	DESCRIPTION OF PROPERTIES	5
ITEM 3.	LEGAL PROCEEDINGS	14
ITEM 4.	MINE SAFETY DISCLOSURES	14
	PART II
ITEM 5.	MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	14
ITEM 6.	SELECTED FINANCIAL DATA	14
ITEM 7.	MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS	14
ITEM 7A.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 7B.	CRITICAL ACCOUNTING ESTIMATES	21
ITEM 8.	FINANCIAL STATEMENTS	21
ITEM 9.	CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE	21
ITEM 9A.	CONTROLS AND PROCEDURES	22
ITEM 9B.	OTHER INFORMATION
	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	25
ITEM 12.	SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	26
ITEM 13.	CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS	27
ITEM 14.	PRINCIPAL ACCOUNTANT FEES AND SERVICE	27
	PART IV
ITEM 15.	EXHIBITS AND REPORTS ON FORM 8-K	28
SIGNATURES		31
CERTIFICATIONS
FINANCIAL STATEMENTS		F-1-F-23

 

 

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 2019, 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 sources of antimony in Mexico but we are still depending on foreign companies for raw material in the future. We expect to receive raw materials from our owned and leased properties for 2019 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 2020, and (3) the Los Juarez mineral deposit with concessions in Queretaro and the Wadley mining concession in San Luis Potosi.

 

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
2019	1,566,585	$5,450,649	$3.48
2018	1,486,120	$6,113,014	$4.11
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

 

Concentration of Sales:

 

During the two years ended December 31, 2019 and 2018, the following sales were made to our three largest customers:

 

Sales to	For the Year Ended
Largest Customers	December 31, 2019	December 31, 2018
Mexichem Specialty Compounds Inc.	$1,823,194	$2,698,770
Nyacol Nanotechnologies	1,099,504	-
Kohler Corporation	1,132,674	1,441,197
Ampacet	-	538,922
	$4,055,372	$4,678,889
% of Total Revenues	49.05%	51.79%

 

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 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
2019	$3.14	$3.46	$3.48	$3.05	$3.03
2018	$3.77	$3.70	$4.11	$3.82	$3.74
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

 

 

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.

 

 

  

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, 2019 and 2018, 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, 2019.

 

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, 2019. 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, 2019, we employed 28 full-time employees in Montana. In addition, we employed 19 people at our zeolite plant in Idaho, and more than 50 employees at our mining, milling and smelting operation in Mexico. We also employ approximately 80 contracted miners. 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 project 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 $283,868 on our balance sheet at December 31, 2019, 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.

 

Global health crises may adversely affect our planned operations.

 

Our business could be materially and adversely affected by the risks, or the public perception of the risks, related to a pandemic or other health crisis, such as the recent outbreak of novel coronavirus (COVID-19). A significant outbreak of contagious diseases in the human population could result in a widespread health crisis that could adversely affect our planned operations. Such events could result in the complete or partial closure of our operations. In addition, it could impact economies and financial markets, resulting in an economic downturn that could impact our ability to raise capital.    

 

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). We also own five acre Black Jack millsite.

 

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:

 

 

The concessions collectively constitute 720 hectares (1,780 acres). 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 jasperoid 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

 

We abandoned the Soyatal mining property and the associated debt in the fourth quarter of 2019, and reported a loss on abandonment of mineral properties on our consolidated statement of operations.

 

USAMSA Puerto Blanco Flotation Mill, Guanajuato, Mexico

 

The flotation plant has a capacity of 100 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 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 have installed a cyanide leach circuit and settling pond that will be used to recover precious metals from our Los Juarez mine. We expect to be in commercial production of precious metals by the third quarter of 2020. During 2019 and 2018, less than 2% 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 (30 acres). Seventeen small rotating furnaces (SRF’s) and four large rotating furnaces (LRF) with an associated stack and scrubbers, were permitted and installed by the end of 2019. 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 twenty to thirty 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 as much as 10MM pounds of contained antimony annually. Concentrates from our flotation plant, and hand-sorted ore from Mexico sources and other areas, are being processed. During 2019, 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 as metal directly to customers 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 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 are 20 feet high, 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 approximate number of holders of record of our common stock at April 14, 2020, 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.

 

During the year ended December 31, 2019, the Company awarded, but did not issue, common stock with a value of $134,375 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $134,375 in director compensation expense and accrued common stock payable.

 

In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services. As part of the agreement, Mr. Parks’ hours worked and cash compensation was reduced.

 

In April 2019, the Company issued the Board members 330,183 shares of the Company’s common stock for services provided during 2018 which was accrued at December 31, 2018, with a value of $175,000.

 

During 2019, the Company sold units consisting of 904,082 shares of its common stock and 452,041 warrants to purchase shares of common stock for $0.48 per unit for total proceeds of $433,960. The warrants are exercisable at $0.65 and expire in 2022. Offering costs associated with the sale totaled $29,761.

 

 

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, 2019, we reported net loss of $3,672,891, after depreciation and amortization of $895,990, compared to a net income of $873,225 for 2018 after depreciation and amortization of $904,844. Our company-wide EBITDA was a negative $2,776,901 for 2019, compared to a positive EBITDA of $1,445,737 for 2018.

 

Net non-cash expense items for 2019 totaled $2,653,757 and included $1,410,736 for abandonment of Mexican mineral properties, $895,990 for depreciation and amortization, $54,112 for amortization of debt discount, $134,375 for stock-based director compensation, $136,000 for stock-based employee compensation, $16,396 for the write-down of inventory, and $6,148 for other items.

 

For the year ended December 31, 2018, we reported net income of $873,225, after depreciation and amortization of $904,844, compared to a loss of $1,134,394 for 2017 after depreciation and amortization of $968,888. Our company-wide EBITDA was $1,445,737 for 2018, compared to a negative EBITDA of $165,506 for 2017.

 

Net non-cash expense items for 2018 totaled $1,234,685 and included $904,844 for depreciation and amortization, $83,991 for amortization of debt discount, $175,000 for stock-based director compensation, $64,702 for the write-down of inventory and $6,148 for other items.

 

During the year ending December 31, 2019, there was a major transaction that had a material impact on the Company’s net income and balance sheet.

 

 

During the year ending December 31, 2018, there were several transactions that had a material impact on the Company’s net income and balance sheet.

 

 

Antimony Sales

 

During 2019, we saw our average sale price decrease by $0.63 per pound from an average price of $4.11 per pound for 2018 to $3.48 per pound for 2019. During 2019, our raw material from our North American supplier increased by approximately 100,000 pounds and our supply of raw material from our Mexican mines decrease by approximately 20,000 pounds. Even though our sales volume increased, our total sales of antimony decreased due to the decrease in our sales price. This resulted in estimated decreased sales of approximately $662,000. Normal shipments from our North American supplier resumed in 2019 at a lower level than we expected, and we do not expect an increase from this supplier in the near future. We do not expect to see a significant increase in the antimony produced by our Mexican mines in 2020.

During 2018, we saw our average sale price increase by $0.10 per pound to $4.11 per pound from an average price of $4.01 per pound for 2017. During 2018, we saw our raw material from our North American supplier temporarily decrease by approximately 660,000 pounds and our supply of raw material from our Mexican mines increase by approximately 128,000 pounds. This resulted in estimated decreased sales of $1.5 million (approximately 532,000 pounds of antimony).

In the third quarter of 2019, we renegotiated our sodium antimonite supply agreement from our North American supplier 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 quarter three of 2019, and resulted in lower antimony production costs and an improved cash flow for 2019 and better expectations for the North American operations for 2020.

 

Zeolite Sales

Our sales volume of zeolite in 2019 was 641 tons less than we sold in 2018, a decrease of 4.5%. Our average sales price increased by approximately $6 per ton, from $186 per ton in 2018 to $192 per ton in 2019 (2.7%). During 2019, total sales of zeolite decreased by $43,827 from 2018. The zeolite division had an EBIDTA of $683,936 for 2019, compared to an EBITDA of $638,764 for 2018. Net income increased from $449,961 in 2018 to $497,470 in 2019, approximately $47,000.

Our sales volume of zeolite in 2018 was 1,944 tons more than we sold in 2017, an increase of 16%. Our average sales price increased by approximately $3 per ton, from $183 per ton in 2017 per ton to $186 per ton in 2018 (2%). During 2018, total sales of zeolite increased by $400,308 from 2017. The zeolite division had EBIDTA of $638,764 for 2018, compared to EBITDA of $554,201 for 2017. Net income increased from $331,472 in 2017 to $449,961 in 2018, approximately $118,000.

Precious Metals Sales

Precious Metals Sales
Silver/Gold - Montana	2018	2019
Ounces Gold Shipped (Au)	68.91	39.92
Ounces Silver Shipped (Ag)	18,278	10,986
Revenues	$254,445	$171,668
Mexico		Mexico
Ounces Gold Shipped (Au)	-	8.21
Ounces Silver Shipped (Ag)		728
Revenues - Gross	-	$22,571
Revenues to Hillgrove	-	$0
Revenues to USAC	-	$22,571
Total Revenues	$254,445	$194,239

 

For the years ended December 31, 2019 and 2018, the EBITDA for precious metals was $194,239 and $254,445, respectively.

Results of Operations by Division
	2019	2018
Antimony Division - United States:
Revenues - Antimony (net of discount)	$5,450,649	$6,113,014
Domestic cost of sales:
Production costs	2,352,959	2,958,396
Depreciation	43,738	52,681
Freight and delivery	243,341	263,673
Indirect production costs	164,876	189,380
Direct sales expense	65,652	65,738
Total domestic antimony cost of sales	2,870,566	3,529,868
Cost of sales - Mexico
Production costs	3,268,277	2,287,694
Depreciation and amortization	596,719	595,317
Freight and delivery	-	54,943
Land lease expense	166,800	166,800
Indirect production costs	71,329	199,561
Total Mexico antimony cost of sales	4,103,125	3,304,315
Total revenues - antimony	5,450,649	6,113,014
Total cost of sales - antimony	6,973,691	6,834,183
Total gross profit (loss) - antimony	(1,523,042)	(721,169)
Precious Metals Division:
Revenues	194,239	254,445
Cost of sales:
Depreciation	69,067	68,042
Total cost of sales	69,067	68,042
Gross profit - precious metals	125,172	186,403
Zeolite Division:
Revenues	2,623,117	2,666,944
Cost of sales:
Production costs	1,160,502	1,290,747
Depreciation	186,466	188,803
Freight and delivery	200,140	177,932
Indirect production costs	158,891	108,913
Royalties	266,388	272,821
Direct sales expense	69,111	91,419
Total cost of sales	2,041,498	2,130,635
Gross profit - zeolite	581,619	536,309
Total revenues - combined	8,268,005	9,034,403
Total cost of sales - combined	9,084,256	9,032,860
Total gross profit (loss) - combined	$(816,251)	$1,543

 

 

Earnings before income taxes
depreciation and amortization

Antimony - Combined USA
and Mexico	2019	2018
Lbs of Antimony Metal USA	794,770	693,861
Lbs of Antimony Metal Mexico:	771,815	792,259
Total Lbs of Antimony Metal Sold	1,566,585	1,486,120
Average Gross Income per Lb Metal	$3.48	$4.11
Net income (loss) per Lb Metal	$(2.74)	$0.16
Gross antimony revenue - net of discount	$5,450,649	$6,113,014
Cost of sales - domestic	(2,870,566)	(3,529,868)
Cost of sales - Mexico	(4,103,125)	(3,304,315)
Operating income (expenses):
Operating expenditures	(1,451,267)	(1,580,141)
Gain (loss) on plant acquisition	-	1,500,000
Gain on sale of land	-	700,000
Loss on abandonment of mineral properties	(1,409,022)	-
Non-operating income (expenses)	87,798	5,839
Income tax benefit	-	332,332
Net income (loss) - antimony	(4,295,533)	236,861
Depreciation and amortization	640,457	647,999
Income tax benefit	-	(332,332)
EBITDA - antimony	$(3,655,076)	$552,528
Precious Metals
Ounces sold
Gold	48	69
Silver	11,714	18,278
Gross precious metals revenue	$194,239	$254,445
Cost of sales	(69,067)	(68,042)
Net income - precious metals	125,172	186,403
Depreciation	69,067	68,042
EBITDA - precious metals	$194,239	$254,445
Zeolite
Tons sold	13,680	14,321
Average Sales Price/Ton	$191.75	$186.23
Net income /Ton	$36.36	$31.42
Gross zeolite revenue	$2,623,117	$2,666,944
Cost of sales	(2,041,498)	(2,130,635)
Operating expenses	(68,567)	(74,366)
Non-operating expenses	(15,582)	(11,982)
Net income - zeolite	497,470	449,961
Depreciation	186,466	188,803
EBITDA - zeolite	$683,936	$638,764
Company-wide
Gross revenue	$8,268,005	$9,034,403
Production costs	(9,084,256)	(9,032,860)
Operating income (expenses)	(2,928,856)	545,493
Non-operating income (expenses)	72,216	(6,143)
Income tax benefit	-	332,332
Net income (loss)	(3,672,891)	873,225
Depreciation,& amortization	895,990	904,844
Income tax benefit	-	(332,332)
EBITDA	$(2,776,901)	$1,445,737

 

 

During the period ended December 31, 2019, the most significant event affecting our financial performance was the decrease in the price of antimony. This decrease in prices caused us to re-evaluate our commitment to the two antimony mines we were purchasing in Mexico. We made the decision that with the depressed prices and the cost of developing the mines, it was in our best interest to abandon these properties and look at re-acquiring them in the future if antimony prices improved. It was decided that our resources should be directed to completing our precious metals facility at Puerto Blanco and starting precious metals production in 2020. In connection with the low antimony prices, we negotiated a lower cost agreement with our North American supplier which will help us with future cash flow.

 

Our plans are to process 14,000 tons of ore from the Los Juarez mine in 2020 and 24,000 tons in 2021. We think that the gross value of the ore is approximately $120 per ton.

 

In 2018, we only received 50% of our expected supply from North American sources, and we increased our raw material from Mexico by approximately 130,000 pounds. We anticipated increasing the raw material from Mexico and the resumption of normal shipments from our North American supplier in 2019, but these plans did not materialize due to low overall metal prices and the low antimony prices in particular.

 

In both 2019 and 2018, the Puerto Blanco mill circuits were utilized less than 2% of their capacity, but with the completion of the cyanide leach circuit we expect it to be fully utilized processing precious metals ore from the Los Juarez mine. Some antimony will be realized as a by-product of processing the Los Juarez ore.

 

The estimated recovery of precious metals per metric ton, after the caustic leach and cyanide leach circuits, is as follows at Los Juarez:

  

Antimony:

 

Schedule of Los Juarez recovery values	Metal	Assay	Recovery	Value	Value/Mt
	Gold	0.035 opmt	90%	$1500/oz	$47.00
	Silver	3.27 opmt	90%	$12.00/oz	$35.32
	Antimony	0.652%	70%	3.15/lb	$33.86
	Total				$116.18

 

 

 

Zeolite:

 

During 2019, BRZ sold 13,680 tons compared to 14,321 tons in 2018, a decrease of 641 tons (4%). BRZ realized a net income of $497,470 in 2019 after depreciation of $186,466 compared to a net income of $449,961 in 2018 after depreciation of $188,803.

 

 

General and Administrative:

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 8.1%, and 8.8%, of sales for 2019 and 2018, respectively.

The decrease in professional fees from 2018(approximately $118,000) was primarily due to a decrease in attorney fees paid to our Mexican tax attorney and accountants in 2018 for representation during the audit of our Mexican subsidiary, which was resolved in our favor. Our accounting fees for 2019 related to our annual audit and our quarterly SEC filings $118,998 compared to $116,716 for 2018.

Factoring costs increased in 2019 from approximately $5,000 in 2018 to approximately $8,500 in 2019.

The discounts we gave for early payments were approximately $100,000 for 2018 and $85,000 for 2019.

Subsidiaries

 

The Company's consolidated financial statements include the accounts of its wholly-owned subsidiaries BRZ, USAMSA, AM, and, since August 31, 2018, Lanxess Laurel and Lanxess Laurel Mexico. All intercompany balances and transactions are eliminated in consolidation.

 

Financial Condition and Liquidity

 

	2019	2018
Current assets	$1,279,755	$1,903,256
Current liabilities	(3,975,681)	(3,517,618)
Net Working Capital	$(2,695,926)	$(1,614,362)
Cash provided (used) by operations	$(5,711)	$(656,631)
Cash provided (used) by investing:
Cash used for capital outlay	(792,925)	(899,119)
Proceeds from plant acquisition	-	1,500,000
Proceeds from sale of land	400,000	300,000
Cash provided (used) by financing:
Net payments (to) from factor	(5,644)	5,644
Proceeds from notes payable to bank	13,149	(8,648)
Proceeds from common stock issued	404,199	-
Principal paid on long-term debt	(127,683)	(236,915)
Advances from related party	237,400	135,000
Payments on advances from related party	(35,066)	(135,000)
Checks issued and payable	(28,849)	18,234
Net change in cash and restricted cash	$58,870	$22,565

 

Our net working capital decreased for the year ended December 31, 2019 from a negative amount of $1,614,362 at the beginning of the year to a negative amount of $2,695,926 at the end of 2019. Our current assets decreased primarily due to payment of a $400,000 note receivable from the sale of land in Mexico, a decrease in accounts receivable and inventories. Our current liabilities increased by $458,063, which included a decrease of approximately $649,000 in the current portion of long-term debt related to the write-off of the Soyatal and Guadalupe properties and, increases in accounts payable and other accrued liability accounts and the reclassification of the Hillgrove/Red River Resources debt of $378,074 from long term debt to current liabilities. Capital improvements were paid for with cash and debt.

 

For the year ending December 31, 2020, we are planning to finance our improvements with operating cash flow. Our 2020 improvements are expected to include improvements related to the cyanide leach circuit at Puerto Blanco.

 

Going Concern Consideration

 

At December 31, 2019, the Company’s consolidated financial statements show negative working capital of approximately $2.7 million and an accumulated deficit of approximately $29.4 million.  With the exception of 2018, the Company has incurred losses for the past several years.  The net income in 2018 was primarily due to non-recurring events which contributed approximately $2.5 million to net income. These factors indicate that there is substantial doubt regarding the ability to continue as a going concern for the next twelve months. 

 

  

Over the past several years, the Company has been able to make required principal payments on its debt from cash generated from operations.  The abandonment of the mineral properties in Mexico (see Note 6) resulted in the removal of approximately $1,500,000 of debt and the related payments which were $86,000 in 2019 and $193,000 in 2018.    Current portion of outstanding debt at December 31, 2019 was $56,334 compared to $705,460 at December 31, 2018.  The Company is confident it can make debt payments when due.  During 2019, the Company was successful in raising $404,199 from sale of shares of its common stock to fund capital projects in Mexico.  

 

The continuing losses are principally a result of the Company’s antimony operations due to both depressed antimony prices and production costs incurred in Mexico.  To improve conditions, the Company plans to continue searching for areas to reduce these production costs.   Management expects improvement in cash flow in 2020 from the sale of precious metals extracted from the leach circuit scheduled to come on line in Mexico in the second half of 2020.  

 

There can be no assurance that management plans will alleviate the doubt regarding the Company’s ability to continue as a going concern over the next twelve months, particularly during the current period of market instability related to the COVID-19 pandemic.  If the going concern assumption were not appropriate for these financial statements, then adjustments would be necessary to the carrying values of the assets and liabilities, the reported revenues and expenses, and the balance sheet classifications used.

 

Critical Accounting Estimates

 

We have, besides our estimates of the amount of depreciation on our assets, two critical accounting estimates. The percentage of antimony contained in our unprocessed ore in inventory is based on assays taken at the time the ore is delivered, and may vary when the ore is processed. 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

 

 

 

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, 2019. 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, 2019. 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 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, 2019, 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, 2019.

 

 

PART III

 

Item 10  Directors, Executive Officers, Promoters and Control Persons, Compliance with Section 16(a) of the Exchange Act

 

Identification of directors and executive officers at December 31, 2019, is as follows:

 

Name	Age	Affiliation	Expiration of Term
John C. Lawrence	81	Chairman, President, Director	Annual meeting
John C. Gustavsen	71	First Vice-President	Annual meeting
Russell C. Lawrence	51	Second Vice-President, Director	Annual meeting
Matthew Keane	64	Third Vice-President	Annual meeting
Daniel L. Parks	71	Chief Financial Officer	Annual meeting
Alicia Hill	38	Secretary, Controller, and Treasurer	Annual meeting
Hart W. Baitis	70	Director	Annual meeting
Jeffrey Wright	50	Director	Annual meeting
Craig Thomas	45	Director	Annual meeting
Dr. Blaise Aguirre	55	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.

 

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.

 

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.

 

Dr. Blaise Aguirre. Blaise Aguirre, MD joined the Board of Directors of United States Antimony Corp. on August 14 2019, to replace a Director that retired for medical reasons. He received his Medical Doctor’s degree in 1989 from the University of the Witwatersrand, Johannesburg, South Africa, and performed his residency at Boston University School of Medicine from 1991 to 1994. He is an Assistant Professor of Psychiatry at Harvard Medical School and he is the founding Medical Director of 3East at McLean Hospital. Dr. Aguirre is fluent in Spanish and lectures worldwide. He was elected to the Board at Investors Capital Holdings, Ltd in 2011 and remained on the Board until it was sold to RCAP. He sits on the boards of various privately held companies. He developed and maintains enduring relationships with institutional money managers, venture capitalists, Angel investors and developed an expertise as a small cap stock analyst as a broker with series 7 and 63 securities licenses.

 

 

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 2018 calendar year. Each incumbent director attended all of the meetings held during the 2019 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 three members at December 31, 2019, Craig Thomas (Chairman), Jeffrey Wright, and Hart Baitis. 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, 2019:

 

Directors Compensation

 

Name and Principal Position	Fees Earned paid in Cash	Fees Earned paid in Stock	Total Fees, Awards, and Other Compensation
John C. Lawrence, Chairman		$25,000	$25,000
Russell Lawrence, Director		$25,000	$25,000
Hartmut Baitis, Director		$25,000	$25,000
Dr. Blaise Aguirre, Director		$9,375	$9,375
Jeffrey Wright, Director		$25,000	$25,000
Craig Thomas, Director		$25,000	$25,000
Totals	$0	$134,375	$134,375

 

 

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. Hart Baitis and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2019 and 2018.

 

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, 2019 and 2018.

 

Name and Principal Position	Year	Salary	Bonus	Stock Awards (2)	Total
John C. Lawrence	2019	$141,000	N/A	$25,000	$166,000
President and Chief Executive Officer	2018	$141,000	N/A	$25,000	$166,000
John C. Gustaven	2019	$100,000	N/A		$100,000
Executive Vice President	2018	$100,000	N/A		$100,000
Russell Lawrence	2019	$110,000	N/A	$25,000	$135,000
Vice President for Latin America	2018	$110,000	N/A	$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, 2019, 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, 2019. (John Lawrence, CEO, exercised his warrants at a price of $0.25 per share for 250,000 shares on March 20, 2020. The receipt of $62,500 from the warrants will be used to reduce loans payable to Mr. Lawrence.)

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

 

 

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 1, 2019, 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
Series B Preferred	Excel Mineral Company P.O. Box 3800 Santa Barbara, CA 93130	750,000	100.00%	N/A
Series C Preferred	Richard A. Woods 59 PennCircle 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%	*
Common Stock	John C. Lawrence	4,545,350(2)	64.93%	6.35%
	Russell Lawrence	400,348	5.72%	*
	Hart Baitis	386,243	5.52%	*
	Blaise Aguirre	308,169	4.40%	*
	Jeffrey Wright	282,973	4.04%	*
	Mathew Keane	10,300	0.15%	*
	Daniel Parks	464,500	6.64%	*
	Craig Thomas	602,536	8.60%	*
Common Stock	All Directors and Executive Officers as a Group	7,000,599	100.00%	9.78%
Series D Preferred	John C. Lawrence	1,590,672(4)	90.80%	2.22%
	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%	2.45%
Common Stock and Preferred Stock w/voting rights	All Directors and Executive Officers as a Group	7,000,599	81.48%	9.78%
All preferred Shareholders that are officers or directors		1,590,672	18.52%	2.22%
Common and Preferred Voting Stock		8,591,271	100.00%	12.00%

 

 

 

 

 

 

 

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.

 

During the year ended December 31, 2019, the Company awarded, but did not issue, common stock with a value of $134,375 to its Board of Directors as compensation for their services as directors. In connection with the issuances, the Company recorded $134,375 in director compensation expense and accrued common stock payable.

 

In January 2019, the Company issued Daniel Parks, the Company’s Chief Financial Officer, 200,000 shares of the Company’s common stock with a fair value of $136,000 to retain his services. As part of the agreement, Mr. Parks’ hours worked and cash compensation was reduced.

 

In April 2019, the Company issued the Board members 330,183 shares of the Company’s common stock for services provided during 2018 which was accrued at December 31, 2018, with a value of $175,000.

 

The Company’s President and Chairman, John Lawrence, rents equipment 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, 2019 and 2018 was $156,974 and $93,567, respectively. Expenses paid to Mr. Lawrence for the years ended December 31, 2019 and 2018 were $9,799 and $9,634, respectively

 

During 2019, the Company’s President and Chairman, John Lawrence, made loans to the Company totaling $227,200, of which $35,006 had been repaid as of December 31, 2019, leaving a note balance of $192,134. John C. Gustaven, First Vice-President, loaned the company $10,200 during 2019, of which none had been repaid as of December 31, 2019.

 

During the year ended December 31, 2018, the Company awarded, but did not issue, common stock with a value 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 and accrued common stock payable.

 

In May 2018, the Company issued the Board members 739,018 shares of the Company’s common stock for services provided during 2017 which was accrued at December 31, 2017, with a value of $175,000.

 

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 2018 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 2019 and 2018 were $118,998 and $116,716, 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 2019 and 2018 were $11,833 and $12,465, respectively.

 

All Other Fees

There were no other fees billed by DeCoria, Maichel & Teague P.S. during 2019. During 2018, we paid $5,998 for services related to the acquisition of Lanxess, LLC, provided by DeCoria, Maichel & Teague P.S.

 

Item 15. Exhibits and Reports on Form 8-K

 

Exhibit Number	Description
3.01	Articles of Incorporation of USAC, filed as an exhibit to USAC's Form 10-KSB for the fiscal year ended December 31, 1995 (File No.001-08675), are incorporated herein by this reference.
3.02	Amended and Restated Bylaws of USAC, filed as an exhibit to amendment No. 2 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference.
3.03	Articles of Correction of Restated Articles of Incorporation of USAC.
3.04	Articles of Amendment to the Articles of Incorporation of United States Antimony Corporation, filed as an exhibit to USAC's Form 10-QSB for the quarter ended September 30, 2002 (File No. 001-08675), are incorporated herein by this reference.
4.01	Key Employees 2000 Stock Plan, filed as an exhibit to USAC's Form S-8 Registration Statement filed on March 10, 2000 (File No. 333-32216) is incorporated herein by this reference.

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:

 

10.10	Yellow Jacket Venture Agreement
10.11	Agreement Between Excel-Mineral USAC and Bobby C. Hamilton
10.12	Letter Agreement
10.13	Columbia-Continental Lease Agreement Revision
10.14	Settlement Agreement with Excel Mineral Company
10.15	Memorandum Agreement
10.16	Termination Agreement
10.17	Amendment to Assignment of Lease (Geosearch)
10.18	Series B Stock Certificate to Excel-Mineral Company, Inc.
10.19	Division Order and Purchase and Sale Agreement
10.20	Inventorynd Sales Agreement
10.21	Processing Agreement

10.22	Release and settlement agreement between Bobby C. Hamilton and United States Antimony Corporation
10.23	Columbia-Continental Lease Agreement
10.24	Release of Judgment
10.25	Covenant Not to Execute

 

                                 

10.26	Warrant Agreements filed as an exhibit to USAC's Annual Report on Form 10-KSB for the year ended December 31, 1996 (File No. 001-08675), are incorporated herein by this reference
10.27	Letter from EPA, Region 10 filed as an exhibit to USAC's Quarterly Report on Form 10-QSB for the quarter ended September 30, 1997 (File No. 001-08675) is incorporated herein by this reference
10.28	Warrant Agreements filed as an exhibit to USAC's Annual Report on Form 10-KSB for the year ended December 31, 1997 (File No. 001-08675) are incorporated herein by this reference
10.30	Answer, Counterclaim and Third-Party Complaint filed as an exhibit to USAC's Quarterly Report on Forms 10-QSB for the quarter ended September 30, 1998 (File No. 001-08675) is incorporated herein by this reference

 

Documents filed with USAC's Annual Report on Form 10-KSB for the year ended December 31, 1998 (File No. 001-08675), are incorporated herein by this reference:

 

10.31	Warrant Issue-Al W. Dugan
10.32	Amendment Agreement

 

Documents filed with USAC's Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999 (File No. 001-08675) is incorporated herein by this reference:

 

10.33	Warrant Issue-John C. Lawrence
10.34	PVS Termination Agreement

 

Documents filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1999 (File No. 001-08675) are incorporated herein by this reference:

 

10.35	Maguire Settlement Agreement
10.36	Warrant Issue-Carlos Tejada
10.37	Warrant Issue-Al W. Dugan
10.38	Memorandum of Understanding with Geosearch Inc.
10.39	Factoring Agreement-Systran Financial Services Company
10.40	Mortgage to John C. Lawrence
10.41	Warrant Issue-Al W. Dugan filed as an exhibit to USAC's Quarterly Report on Form 10-QSB for the quarter ended March 31, 2000 (File No. 001-08675) is incorporated herein by this reference
10.42	Agreement between United States Antimony Corporation and Thomson Kernaghan & Co., Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference
10.43	Settlement agreement and release of all claims between the Estate of Bobby C. Hamilton and United States Antimony Corporation filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference.
10.44	Suply Contracts with Fortune America Trading Ltd. filed as an exhibit to USAC form 10-QSB for the quarter ended June 32000 (File No. 001-08675) are incorporated herein by this reference
10.45	Amended and Restated Agreements with Thomson Kernaghan & Co., Ltd, filed as an exhibit to amendment No. 3 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508), are incorporated herein by this reference
10.46	Purchase Order from Kohler Company, filed as an exhibit to amendment No. 4 to USAC's Form SB-2 Registration Statement (Reg. No. 333-45508) are incorporated herein by this reference

 

 

Documents filed as an exhibit to USAC's Form 10-QSB for the quarter ended June 30, 2002 (File No. 001-08675) are incorporated herein by this reference:

 

10.47	Bear River Zeolite Company Royalty Agreement, dated May 29, 2002
10.48	Grant of Production Royalty, dated June 1, 2002
10.49	Assignment of Common Stock of Bear River Zeolite Company, dated May 29, 2002
10.50	Agreement to Issue Warrants of USA, dated May 29, 2002
10.51	Secured convertible note payable - Delaware Royalty Company dated December 22, 2003*
10.52	Convertible note payable - John C. Lawrence dated December 22, 2003*
10.53	Pledge, Assignment and Security Agreement dated December 22, 2003*
10.54	Note Purchase Agreement dated December 22, 2003*
14.0	Code of Ethics*
31.1	Rule 13a-14(a)/15d-14(a) Certifications Certification of John C. Lawrence*
32.1	Section 1350 Certifications Certification of John C. Lawrence*
44.1	CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference