UNITED STATES ANTIMONY CORP (UAMY) FY 2023 MD&A
This page reproduces the company's own Item 7 MD&A text from the linked SEC filing. It is filer text, not grepcent analysis, scoring, or investment advice.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the notes related thereto which are included in “Item 8. Financial Statements and Supplementary Data” of this Annual Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements,” “Item 1A. Risk Factors” and elsewhere in this Annual Report.
Overview
Our Company has been building its business strategy since inception around 1970. This strategy started with its antimony and precious metals operations in Montana and then continued with the antimony and precious metals operations in Mexico and the zeolite operations in Idaho. Antimony mining was halted in the U.S., including our antimony mining in Montana, in the 1980’s due to less expensive antimony ore imported into the U.S. from other countries, primarily China. However, the Company continues to process antimony ore into finished antimony oxide, metal, trisulfide, and other products at its plant in Montana.
Since the 1980s, our Company has been attempting to secure antimony mining and processing operations in Mexico to restore a vertically integrated antimony mining to marketing process. The building of operations in Mexico since 2009 has been costly with expenditures on fixed assets of approximately $13 million. Along with this capital spent on fixed assets, our Mexico operations have generated losses cumulatively since inception. As a result, the Company shut down the operational activities in Mexico on March 11, 2024, as described in the “Recent Developments” section of this Annual Report.
Our zeolite operations are vertically integrated from mining to selling zeolite. We review initiatives to ensure an adequate return on our investment. We also review the performance of our segments and our Company with a focus on generating positive cash flow. In addition, we are focused on improving our customer service based on the needs of our customers. A cornerstone of our strategy is the well-being of our employees as they are our most valuable asset. Our mission is to service our employees, customers, and vendors well and grow our business profitably both organically as well as through strategic acquisitions to increase shareholder value. Recently, our Company added some key elements and personnel to its strategy related to customer service, finance, and plant management along with several new board members to help achieve our goals and our mission.
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Consolidated Financial Information
Comparison of the Years Ended December 31, 2023 and 2022
| Consolidated Statements of Operations Information: | For the year ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31, | ||||||||
| 2023 | 2022 | |||||||
| Revenues | $ | 8,693,155 | $ | 11,044,707 | ||||
| Costs of revenues | 12,037,939 | 9,048,517 | ||||||
| Gross profit (loss) | $ | (3,344,784 | ) | $ | 1,996,190 | |||
| Total operating expenses | 3,724,217 | 1,647,985 | ||||||
| Income (loss) from operations | $ | (7,069,001 | ) | $ | 348,205 | |||
| Total other income (expense) | 720,714 | 96,529 | ||||||
| Income tax expense | - | 16,073 | ||||||
| Net income (loss) | $ | (6,348,287 | ) | $ | 428,661 | |||
| Weighted average shares of common stock (basic) | 107,551,931 | 106,287,359 | ||||||
| Weighted average shares of common stock (diluted) | 107,551,931 | 106,287,359 | ||||||
| Consolidated Balance Sheet Information: | December 31, | December 31, | ||||||
| 2023 | 2022 | |||||||
| Working capital | $ | 12,642,282 | $ | 19,397,489 | ||||
| Total assets | 28,094,995 | 34,700,450 | ||||||
| Accumulated deficit | (39,418,619 | ) | (33,070,332 | ) | ||||
| Total stockholders’ equity | 25,520,968 | 31,869,255 |
Revenues
Revenue decreased by $2.4 million, or 21%, in fiscal year 2023 compared to fiscal year 2022 primarily due to: (1) the lower average antimony sales price per pound in 2023, which accounted for approximately $1 million of the revenue decrease, (2) less pounds of antimony sold in 2023, which accounted for approximately $0.6 million of the revenue decrease, and (3) less tons of zeolite sold in 2023, which accounted for approximately $0.7 million of the revenue decrease.
Our average antimony sales price per pound is impacted by the market price for antimony, which fluctuates widely based on variables out of our control. These variables, which can change in the future, include the availability and price of imported antimony metal, the quantity of new antimony metal supply, and the industrial demand for antimony metal. As a result, the results of our operations and financial condition could be materially affected, positively or negatively, going forward by changes in the market price of antimony.
Our zeolite business sold less tons of its product in 2023 compared to 2022 primarily due to production downtime in 2023. BRZ experienced 18 weeks of unexpected production downtime in 2023 primarily due to machinery and equipment inadequacies or failures. We remain vigilant in improving or replacing our fixed assets, including machinery, equipment, and vehicles, that can cause production downtime as our production of zeolite products is contingent on the proper functioning of our fixed assets. However, our fixed assets may be inadequate or fail in the future, which could affect our ability to produce finished zeolite products to sell to our customers and generate revenue and could have a material adverse impact on the results of our operations and financial condition.
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Gross Profit (Loss)
In fiscal year 2023, there was a gross loss of ($3.3 million) compared to a gross profit of $2 million in fiscal year 2022. This decrease between the years was primarily due to the following:
| · | Higher plant processing costs at our Mexico antimony segment caused finished goods inventory cost to be higher than its sales value. As a result, our Mexico antimony segment recorded an expense to write-down its inventory cost to its net realizable value, which was higher in 2023 compared to 2022. The higher plant processing costs were primarily due to the low percentage of antimony contained in the ore purchased in Mexico. | |
|---|---|---|
| · | Lower average antimony sales price per pound in 2023, as described above in the “Revenues” section above, | |
| · | Production downtime at our zeolite operations in 2023 not only caused lower revenues, as described above in the “Revenues” section above, but also caused increased maintenance costs and inefficient facility-related costs in rectifying these production downtime issues, both of which caused lower gross profit, | |
| · | Higher reserve on Mexico Value Added Tax (“VAT” or “IVA”) receivable primarily due to increased government regulations and restrictions, | |
| · | Fixed production costs with lower sales volume at our Montana and Idaho plants lowered gross profit and gross margin, and | |
| · | Lower gross profit and gross margin on sales of purchased finished antimony trioxide. |
Operating Expenses
Operating expense increased by $2.1 million in fiscal year 2023 compared to fiscal year 2022 primarily due to:
| · | Increased asset retirement obligation (“ARO”) and other expenses in the Mexico antimony segment primarily due to the announced shutdown of Mexico operations on March 11, 2024, as described in the “Recent Developments” of this Annual Report. | |
|---|---|---|
| · | Increased professional fees relating primarily to Mexico legal matters and regaining compliance with SEC filings, | |
| · | Increased Board fees associated with market pay comparability and adjustments, | |
| · | Increased bad debt expense due primarily to one customer who received an antimony product from our Montana location, | |
| · | Loss on the disposal of Wadley assets due to the termination of the Wadley acquisition agreement. |
Other Income (Expense)
Other income increased by $0.6 million in fiscal year 2023 compared to fiscal year 2022 primarily due to increased investment income in 2023.
Working Capital
Working capital decreased by $6.8 million during the year ended December 31, 2023 primarily due to inventory, production, and operational costs at our Mexico antimony segment, which decreased working capital by approximately $4.5 million.
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Segment Financial Information
Comparison of the Years Ended December 31, 2023 and 2022
US and Mexico Antimony Segment
Financial and operational metrics of our antimony segment for the years ended December 31, 2023 and 2022 was as follows:
| Year ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Antimony - Combined USA and Mexico | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Revenue | $ | 5,904,480 | $ | 7,631,670 | $ | (1,727,190 | ) | -22.6 | % | |||||||
| Gross profit (loss) | $ | (3,064,606 | ) | $ | 1,505,116 | $ | (4,569,722 | ) | -303.6 | % | ||||||
| Pounds of antimony sold | 1,269,131 | 1,394,036 | (124,905 | ) | -9.0 | % | ||||||||||
| Average sales price per pound | $ | 4.65 | $ | 5.47 | $ | (0.82 | ) | -15.0 | % | |||||||
| Average cost per pound | $ | 7.06 | $ | 4.39 | $ | 2.67 | 60.8 | % | ||||||||
| Average gross profit per pound | $ | (2.41 | ) | $ | 1.08 | $ | (3.49 | ) | -323.2 | % |
The average antimony sales price per pound decreased by $0.82, or 15%, in 2023 compared to 2022 primarily due to the: (1) decrease in the antimony market price, and (2) lower demand and increased competition during various periods in 2023 resulting from national or international developments (e.g., auto strike).
The average antimony gross profit per pound decreased by $3.49 in 2023 compared to 2022 primarily due to:
| · | Higher plant processing costs at our Mexico antimony segment caused finished goods inventory cost to be higher than its sales value. As a result, our Mexico antimony segment recorded an expense to write-down its inventory cost to its net realizable value, which was higher in 2023 compared to 2022. The higher plant processing costs were primarily due to the low percentage of antimony contained in the ore purchased in Mexico. | |
|---|---|---|
| · | Lower average antimony sales price per pound in 2023, as described above in the “Revenues” section above, | |
| · | Higher reserve on Mexico IVA receivable primarily due to increased government regulations and restrictions, | |
| · | Fixed production costs with lower sales volume at our Montana plant lowered gross profit and gross margin, and | |
| · | Lower gross margin on sales of purchased finished antimony trioxide. |
Zeolite Segment
Financial and operational metrics of our zeolite segment for the years ended December 31, 2023 and 2022 was as follows:
| Year ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Zeolite | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Revenue | $ | 2,462,179 | $ | 3,151,330 | $ | (689,151 | ) | -21.9 | % | |||||||
| Gross profit (loss) | $ | (495,981 | ) | $ | 339,907 | $ | (835,888 | ) | -245.9 | % | ||||||
| Tons of zeolite sold | 10,145 | 13,047 | (2,902 | ) | -22.2 | % | ||||||||||
| Average sales price per ton | $ | 242.70 | $ | 241.54 | $ | 1.16 | 0.5 | % | ||||||||
| Average cost per ton | $ | 291.59 | $ | 215.49 | $ | 76.10 | 35.3 | % | ||||||||
| Average gross profit per ton | $ | (48.89 | ) | $ | 26.05 | $ | (74.94 | ) | -287.7 | % |
The average zeolite gross profit per ton decreased by $74.94 in 2023 compared to 2022 primarily due to:
| · | Production downtime in 2023, which not only caused lower revenues, but also caused increased maintenance costs and inefficient facility-related costs in rectifying these production downtime issues, both of which caused lower gross profit, and | |
|---|---|---|
| · | Fixed production costs with lower sales volume at our Idaho plant lowered gross profit and gross margin. |
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Precious Metals Segment
Financial and operational metrics of our precious metals segment for the years ended December 31, 2023 and 2022 was as follows:
| Year ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Precious metals | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Revenue | $ | 326,496 | $ | 261,707 | $ | 64,789 | 24.8 | % | ||||||||
| Gross profit (loss) | $ | 215,803 | $ | 151,167 | $ | 64,636 | 42.8 | % | ||||||||
| Ounces sold - gold | 36.45 | 43.77 | (7.32 | ) | -16.7 | % | ||||||||||
| Ounces sold - silver | 21,426 | 25,122 | (3,696 | ) | -14.7 | % |
Non-GAAP Financial Measure
In addition to our results determined in accordance with GAAP, we believe Earnings Before Interest, Tax, Depreciation and Amortization (“EBITDA”), a non-GAAP financial measure, is a useful measure of our operating performance because it eliminates non-cash expenses that do not reflect our underlying business performance. We use this measure to facilitate a comparison of our operating performance on a consistent basis from period to period and to analyze the factors and trends affecting our business.
EBITDA is intended as a supplemental measure of our performance that is neither required by, nor presented in accordance with, GAAP. We believe that the use of EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial measures with those of comparable companies, which may present similar non-GAAP financial measures to investors. EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP.
We had an EBITDA loss of ($5,387,063) for the year ended December 31, 2023, compared to positive EBITDA of $1,369,095 for the year ended December 31, 2022.
EBITDA by segment for the years ended December 31, 2023 and 2022 was as follows:
| Antimony – Combined USA and Mexico | Year ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Revenue | $ | 5,904,480 | $ | 7,631,670 | $ | (1,727,190 | ) | -22.6 | % | |||||||
| Cost of sales | (8,969,086 | ) | (6,126,554 | ) | (2,842,532 | ) | 46.4 | % | ||||||||
| Gross profit (loss) | $ | (3,064,606 | ) | $ | 1,505,116 | $ | (4,569,722 | ) | -303.6 | % | ||||||
| Total operating expenses | (3,455,592 | ) | (1,482,526 | ) | (1,973,066 | ) | 133.1 | % | ||||||||
| Income (loss) from operations | $ | (6,520,198 | ) | $ | 22,590 | $ | (6,542,788 | ) | -28963.2 | % | ||||||
| Total other income (expense) | 736,378 | 129,481 | 606,897 | 468.7 | % | |||||||||||
| Income tax expense | - | 16,073 | (16,073 | ) | -100.0 | % | ||||||||||
| Net income (loss) - antimony | $ | (5,783,820 | ) | $ | 135,998 | $ | (5,919,818 | ) | -4352.9 | % | ||||||
| Interest expense | (6,504 | ) | 6,884 | (13,388 | ) | -194.5 | % | |||||||||
| Income tax expense | - | 16,073 | (16,073 | ) | -100.0 | % | ||||||||||
| Depreciation and amortization | 590,011 | 630,855 | (40,844 | ) | -6.5 | % | ||||||||||
| EBITDA - antimony | $ | (5,200,313 | ) | $ | 789,810 | $ | (5,990,123 | ) | -758.4 | % |
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| Zeolite | Year ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Revenue | $ | 2,462,179 | $ | 3,151,330 | $ | (689,151 | ) | -21.9 | % | |||||||
| Cost of sales | (2,958,160 | ) | (2,811,423 | ) | (146,737 | ) | 5.2 | % | ||||||||
| Gross profit (loss) | $ | (495,981 | ) | $ | 339,907 | $ | (835,888 | ) | -245.9 | % | ||||||
| Total operating expenses | (268,625 | ) | (165,459 | ) | (103,166 | ) | 62.4 | % | ||||||||
| Income (loss) from operations | $ | (764,606 | ) | $ | 174,448 | $ | (939,054 | ) | -538.3 | % | ||||||
| Total other income (expense) | (15,664 | ) | (32,952 | ) | 17,288 | -52.5 | % | |||||||||
| Income tax expense | - | - | - | n/a | ||||||||||||
| Net income (loss) - zeolite | $ | (780,270 | ) | $ | 141,496 | $ | (921,766 | ) | -651.4 | % | ||||||
| Interest expense | 8,283 | 8,257 | 26 | 0.3 | % | |||||||||||
| Income tax expense | - | - | - | n/a | ||||||||||||
| Depreciation and amortization | 258,741 | 167,825 | 90,916 | 54.2 | % | |||||||||||
| EBITDA - zeolite | $ | (513,246 | ) | $ | 317,578 | $ | (830,824 | ) | -261.6 | % |
| Year ended December 31, | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Precious Metals | 2023 | 2022 | $ Change | % Change | ||||||||||||
| Revenue | $ | 326,496 | $ | 261,707 | $ | 64,789 | 24.8 | % | ||||||||
| Cost of sales | (110,693 | ) | (110,540 | ) | (153 | ) | 0.1 | % | ||||||||
| Gross profit (loss) | $ | 215,803 | $ | 151,167 | $ | 64,636 | 42.8 | % | ||||||||
| Total operating expenses | - | - | - | n/a | ||||||||||||
| Income (loss) from operations | $ | 215,803 | $ | 151,167 | $ | 64,636 | 42.8 | % | ||||||||
| Total other income (expense) | - | - | - | n/a | ||||||||||||
| Net income (loss) - precious metals | $ | 215,803 | $ | 151,167 | $ | 64,636 | 42.8 | % | ||||||||
| Interest expense | - | - | - | n/a | ||||||||||||
| Depreciation and amortization | 110,693 | 110,540 | 153 | 0.1 | % | |||||||||||
| EBITDA - precious metals | $ | 326,496 | $ | 261,707 | $ | 64,789 | 24.8 | % |
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| Consolidated | Year ended December 31, | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | $ Change | % Change | |||||||||||||
| Revenue | $ | 8,693,155 | $ | 11,044,707 | $ | (2,351,552 | ) | -21.3 | % | |||||||
| Cost of sales | $ | (12,037,939 | ) | $ | (9,048,517 | ) | (2,989,422 | ) | 33.0 | % | ||||||
| Gross profit (loss) | $ | (3,344,784 | ) | $ | 1,996,190 | $ | (5,340,974 | ) | -267.6 | % | ||||||
| Total operating expenses | $ | (3,724,217 | ) | $ | (1,647,985 | ) | (2,076,232 | ) | 126.0 | % | ||||||
| Income (loss) from operations | $ | (7,069,001 | ) | $ | 348,205 | $ | (7,417,206 | ) | -2130.1 | % | ||||||
| Total other income (expense) | $ | 720,714 | $ | 96,529 | 624,185 | 646.6 | % | |||||||||
| Income tax expense | $ | - | $ | 16,073 | (16,073 | ) | -100.0 | % | ||||||||
| Net income (loss) - consolidated | $ | (6,348,287 | ) | $ | 428,661 | $ | (6,776,948 | ) | -1581.0 | % | ||||||
| Interest expense | $ | 1,779 | $ | 15,141 | (13,362 | ) | -88.3 | % | ||||||||
| Income tax expense | $ | - | $ | 16,073 | (16,073 | ) | -100.0 | % | ||||||||
| Depreciation and amortization | $ | 959,445 | $ | 909,220 | 50,225 | 5.5 | % | |||||||||
| EBITDA - consolidated | $ | (5,387,063 | ) | $ | 1,369,095 | $ | (6,756,158 | ) | -493.5 | % |
Liquidity and Capital Resources
Our Mexico Antimony Segment has generated significant negative cash flow cumulatively since starting construction in 2009. In fiscal year 2023, our Mexico Antimony Segment had negative cash flow of approximately $4.1 million. On March 11, 2024, the Company shut down the operations of its Mexico Antimony Segment, as described in the “Recent Developments” section of this Annual Report. Also, the Company intends to sell or lease its USAMSA entity, operations, or assets over the next year and has initiated an active search for buyers or leasing opportunities of its operations and/or existing assets. Such sale or lease would provide additional cash.
In the past, the Company has been successful in raising necessary capital from the sale of common stock and warrants and, to a lesser extent, from debt issuance. However, our ability to access capital when needed is not assured and, if capital is not available when, and in the amounts and terms needed, or if capital is not available at all, the Company could be required to significantly curtail its operations, modify existing strategic plans, and/or dispose of certain operations or assets, which could materially harm our business, prospects, financial condition, and operating results.
Our cash and cash equivalents balance at December 31, 2023 was $11,899,574. We believe that our cash and cash equivalents should be sufficient to fund our operations and meet our working capital, capital expenditure, and contractual obligations for the next 12 months.
Material Cash Requirements
We plan to continue reviewing the operations and financial results of each segment to make informed decisions that benefit the Company. Also, we intend to continue to invest in people, customers, infrastructure, and operations with the goals of increasing production, decreasing costs, and growing revenue profitably and, we intend to fund our cash requirements in 2024 with our cash and cash equivalents. We may use cash to acquire businesses. The nature of these investments and transactions, however, makes it difficult to predict the amount and timing of such cash requirements.
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Cash Flows Summary
| WORKING CAPITAL | December 31, | December 31, | ||||||
|---|---|---|---|---|---|---|---|---|
| 2023 | 2022 | |||||||
| Current assets | $ | 14,076,206 | $ | 21,617,359 | ||||
| Current liabilities | (1,433,924 | ) | (2,219,870 | ) | ||||
| Working Capital | $ | 12,642,282 | $ | 19,397,489 |
| For the year ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| CASH FLOWS | December 31, | December 31, | ||||||
| 2023 | 2022 | |||||||
| Cash provided (used) by operations | $ | (4,750,026 | ) | $ | (249,277 | ) | ||
| Cash provided (used) by investing | (1,341,713 | ) | (1,785,661 | ) | ||||
| Cash provided (used) by financing | (1,071,292 | ) | (267,725 | ) | ||||
| Net change in cash and restricted cash for the year ended period | $ | (7,163,031 | ) | $ | (2,302,663 | ) |
Cash and restricted cash decreased by $7.2 million during the year ended December 31, 2023 primarily due to: 1) $4.1 million of negative cash flow of our Mexico Antimony Segment, 2) $1.3 million on fixed asset purchases for our Zeolite Segment, 3) $0.8 million on a payment to the holders of Series D Preferred Stock, and 4) $0.4 million towards a payment on a royalty obligation that had been accumulating since 2016.
Cash flows used by operating activities increased by $4.5 million in 2023 compared to 2022 primarily due to the differential between the net loss generated during 2023 compared to the net income generated during 2022 as well as the increase in the use of cash for inventory in 2023, both of which were primarily due to our Mexico Antimony Segment. The increase was partially offset by increases in non-cash charges related to the write-down of our Mexico inventory to net realizable value and reserves recorded on our Mexico VAT receivable and on one customer receivable in our US Antimony Segment.
Cash flow used by investing activities decreased by $0.4 million in 2023 compared to 2022 primarily due to lower purchases of fixed assets in 2023. Purchases of property, plant, and equipment, which were primarily for our Zeolite Segment, were $1.5 million in 2023 and $1.7 million in 2022, which excludes $0.2 million of fixed assets purchased with equipment financing for our Mexico antimony segment in 2022.
Cash flow used by financing activities increased by $0.8 million in 2023 compared to 2022 primarily due to the payment of dividends of $787,730 on January 25, 2023 to the holders of Series D Preferred Stock.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements as defined by the SEC regulations.
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Critical Accounting Estimates
We have the following critical accounting estimates:
| · | The Company reviews and evaluates the net carrying value of its long-lived assets for impairment upon the occurrence of events or changes in circumstances that indicate that the related carrying amounts may not be recoverable. A test for recoverability is performed based on the estimated undiscounted future cash flows that will be generated from operations at each property and the estimated salvage value of asset. There are many assumptions underlying future cash flows that are subject to significant risks and uncertainties, which include the estimated value of the assets. Estimates of undiscounted future cash flows and salvage values are dependent upon, among other factors, estimates of: (i) product and metals to be recovered from identified mineralization and other resources, (ii) future production and capital costs, (iii) estimated selling prices over the estimated remaining life of the asset and (iv) market values of assets. The Company reviews its business and operations for indications of impairment and, when indications are present, performs an impairment test. The Company will involve a third-party expert when needed. However, it is possible that changes could occur in the near term that could adversely affect the estimate of future cash flows and salvage values to be generated from operating assets resulting in an impairment loss. | |
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| · | The asset retirement obligation in our Consolidated Balance Sheet is based on an estimate of future costs to reclaim properties and retire fixed assets as required by permits, government regulations, and lease or other contractual requirements upon cessation of our operations. Determination of any amounts included in the determination of the fair value of the asset retirement obligation can change periodically as the calculation of the fair value of the asset retirement obligation is based upon numerous estimates and assumptions, including, among others, future retirement costs, future inflation rate, and the Company’s credit-adjusted risk-free interest rate. Also, there are uncertainties associated with the nature, timing, and extent of costs associated with asset retirement obligations, including, among others, the extent of environmental contamination, revisions to laws and regulations by regulatory authorities, and changes in remediation technology. As a result, the ultimate cost as well as the timing of the retirement obligation could change in the future. The Company continually reviews its asset retirement obligations for indications that its asset retirement obligation cost or timing has changed and, when indications are present, recalculates its asset retirement obligation. Also, there are many technical components of an asset retirement obligation. Therefore, the Company will involve a third-party expert when needed to recalculate its asset retirement obligations. However, actual costs to reclaim and retire property and fixed assets when we cease operations may differ from our estimates. |