UNITED STATES ANTIMONY CORP (UAMY) FY 2024 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
United States Antimony Corporation began operations in Montana in January 1970 with an initial strategy centered around antimony mining and processing in Montana. Antimony mining ceased in the U.S. in the 1980’s, including our antimony mining in Montana, due to a significant increase of less expensive antimony ore being imported into the United States. However, the Company continued to process ore sourced from foreign suppliers into antimony oxide, metal, and trisulfide and into precious metals, primarily gold and silver, at its facility in Montana. In the early 2000’s, the Company expanded its footprint with antimony and precious metals operations located in Mexico and zeolite operations located in Idaho. Our zeolite operations are vertically integrated from mining to selling zeolite, which is the Company’s goal for its businesses. Consistent with this strategy of vertical integration, the Company acquired mining claims and leases located in Alaska and Ontario, Canada in 2024 that could expand its operations as well as its product offerings. The Company intends to start with a geophysics study and a geological, structural, and petrographic study to enable future development with plans for a comprehensive drilling program in Alaska and Ontario.
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We review our strategic initiatives to ensure an adequate return on our investment. We also review the performance of our reportable segments and the performance of our Company with a focus on generating positive cash flow. 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 personnel in the areas of customer service, sales, operations, finance, and plant management, a few new board members, several new business partners, and new mining claims, all of which will help achieve our strategic goals and our mission of attentive service and profitable growth.
Following is selected consolidated financial information:
| Consolidated statement of operations information: | ||||||||
|---|---|---|---|---|---|---|---|---|
| For the years ended | ||||||||
| December 31,2024 | December 31,2023 | |||||||
| Revenues | $ | 14,937,962 | $ | 8,693,155 | ||||
| Costs of revenues | 11,471,044 | 12,037,939 | ||||||
| Gross profit (loss) | 3,466,918 | (3,344,784 | ) | |||||
| Total operating expenses | 5,857,730 | 3,724,217 | ||||||
| Loss from operations | (2,390,812 | ) | (7,069,001 | ) | ||||
| Total other income | 660,408 | 720,714 | ||||||
| Income tax expense | - | - | ||||||
| Net loss | $ | (1,730,404 | ) | $ | (6,348,287 | ) |
| Consolidated balance sheet information: | ||||||||
|---|---|---|---|---|---|---|---|---|
| December 31,2024 | December 31,2023 | |||||||
| Working capital | $ | 16,672,180 | $ | 13,178,748 | ||||
| Total assets | $ | 34,642,602 | $ | 28,094,995 | ||||
| Accumulated deficit | $ | (41,149,023 | ) | $ | (39,418,619 | ) | ||
| Total stockholders’ equity | $ | 28,600,673 | $ | 25,520,968 |
Revenues
Revenues increased by $6.2 million, or 72%, in fiscal year 2024 compared to fiscal year 2023 primarily due to:
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| · | Antimony revenue: |
| o | 34% increase in pounds sold, and | |
|---|---|---|
| o | 40% increase in average sales price per pound. |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| · | Zeolite revenue: |
| o | 9% increase in tons sold, and | |
|---|---|---|
| o | 9% increase in average sales price per ton. |
There was higher demand for antimony products in 2024 compared to 2023 primarily due to a shortage of supply and a shortage of processors, which increased the pounds of antimony we sold in 2024. This higher demand also increased our average sales price per pound in 2024, which is tied to the market price per pound of antimony that averaged $5.50 in 2023 and $10.44 in 2024.
We sold more zeolite in 2024 compared to 2023 as we increased our production reliability and on-hand inventory balance and improved our on-time delivery of product to our customers during 2024. Also, our average sales price per ton increased in 2024 compared to 2023 as our price increase became fully effective in early 2024.
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Gross Profit (Loss)
Gross profit was $3.5 million in fiscal year 2024 compared to a gross loss of ($3.3 million) in fiscal year 2023. This increase between the years was primarily due to the following:
| · | Higher average sales price of our antimony products in 2024 versus 2023 as described above in the “Revenues” section, | |
|---|---|---|
| · | Improved antimony plant efficiencies with more antimony volume in 2024 compared to 2023, including efficiencies in the areas of labor, utilities, and supplies, | |
| · | Higher inventory write-downs to net realizable value related to our Mexico operations in 2023 compared to 2024, which was primarily due higher facility processing costs as a result of the low percentage of antimony contained in the ore that was purchased, and | |
| · | Higher reserve in 2023 compared to 2024 on the receivable related to the refund of import value-added tax (“IVA tax” or “VAT”) in Mexico. |
Operating Expenses
Operating expense increased by $2.1 million in fiscal year 2024 compared to fiscal year 2023 primarily due to:
| · | Increased compensation costs primarily related to the build-out of the Company’s management and operational team to cover our expanded business operations and growth initiatives, | |
|---|---|---|
| · | Increased project costs in 2024 related to mining claim purchases in Alaska and Ontario, Canada, preparing a mineral resource and reserve report for BRZ, potential acquisitions, and efforts to obtain government funding and sales. | |
| · | Increased non-cash stock compensation expense as the Company issued stock grants in 2024 from an equity incentive plan approved by its shareholders at the end of 2023, | |
| · | Increased board fees in 2024 associated with market pay comparability and adjustments, and | |
| · | Higher costs in Mexico in 2023 versus 2024 related to contractual expenses and asset retirement obligation expenses. |
Working Capital
Working capital increased by $3.5 million at December 31, 2024 compared to December 31, 2023 primarily due to increased cash and cash equivalents, partially offset by increased trade payables and accrued liabilities. The increase in cash and cash equivalents was primarily related to proceeds received from the sale of our common stock and the exercise of warrants. Trade payables increased mainly due to the increased cost of antimony ore linked to the increased antimony market price. The increase in accrued liabilities was primarily related to compensation costs incurred but not paid at December 31, 2024 compared to December 31, 2023. The increase in net accounts receivable is primarily due to the increase in our average sales price per pound as it is linked to the increased antimony market price.
Comparison of Financial Information for the years ended December 31, 2024 and 2023
Antimony
Financial and operational antimony metrics for the years ended December 31, 2024 and 2023 were as follows:
| For the years ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Antimony | December 31,2024 | December 31,2023 | $ Change | % Change | |||||||||||
| Revenue (a) | $ | 11,102,573 | $ | 5,904,480 | $ | 5,198,093 | 88% | ||||||||
| Gross profit (loss) (a) | $ | 3,584,349 | $ | (3,072,839 | ) | $ | 6,657,188 | 217% | |||||||
| Pounds of antimony sold (a) | 1,459,557 | 1,086,176 | 373,381 | 34% | |||||||||||
| Average sales price per pound | $ | 7.61 | $ | 5.44 | $ | 2.17 | 40% | ||||||||
| Average cost per pound | $ | 5.15 | $ | 8.27 | $ | (3.12 | ) | (38)% | |||||||
| Average gross profit (loss) per pound | $ | 2.46 | $ | (2.83 | ) | $ | 5.29 | 187% |
| Column 1 | Column 2 | Column 3 |
|---|---|---|
| (a) | Revenue from sales of gold and silver totaled $525,087 and $326,496 and revenue from sales of antimony ore and concentrates totaled $368,627 and $nil for the years ended December 31, 2024 and 2023, respectively, which are excluded from Revenue and Gross Profit (Loss) in the chart above but included in the antimony segment. Pounds of Antimony Sold in the chart above excludes the pounds sold related to gold, silver, and ore and concentrates for both years presented. |
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Antimony revenue increased $5.2 million, or 88%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to higher volume and price, which were both fueled by an increased demand for antimony.
Our average sales price of $7.61 per pound for fiscal year 2024 was lower than the antimony market price of $10.44 per pound for the same period primary due to two factors. First, our sales price per pound related to the processing of customer-owned antimony ore into antimony metal excludes the ore cost and is therefore lower than the antimony market price per pound. Second, our sales price per pound is set when a customer orders product, which can be one to two months prior to the product shipping causing our sales price per pound to be lower than the market price during times of rising market prices.
Gross profit increased $6.7 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to cost efficiencies with higher volume in the current year, a higher average sales price per pound in 2024, and higher inventory write-downs and IVA tax receivable reserves in 2023 related to our Mexico operations.
Zeolite
Financial and operational metrics of our zeolite segment for the years ended December 31, 2024 and 2023 were as follows:
| For the years ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Zeolite | December 31,2024 | December 31,2023 | $ Change | % Change | |||||||||||
| Revenue | $ | 2,941,675 | $ | 2,462,179 | $ | 479,496 | 19% | ||||||||
| Gross profit (loss) | $ | (642,635 | ) | $ | (495,981 | ) | $ | (146,654 | ) | (30)% | |||||
| Tons of zeolite sold | 11,095 | 10,145 | 950 | 9% | |||||||||||
| Average sales price per ton | $ | 265 | $ | 243 | $ | 22 | 9% | ||||||||
| Average cost per ton | $ | 323 | $ | 292 | $ | 31 | 11% | ||||||||
| Average gross profit (loss) per ton | $ | (58 | ) | $ | (49 | ) | $ | (9 | ) | (18)% |
Zeolite revenue increased $0.5 million, or 19%, for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to:
| · | The increased tons of zeolite sold, which was primarily due to our ability to deliver customer orders more reliably and more timely, and | |
|---|---|---|
| · | The increased average sales price per ton, which was mainly related to a price increase that became fully effective in early 2024. |
Gross profit decreased by $0.1 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to increased costs related to repairing older machinery and equipment and backup equipment leases, especially during production downtime.
Non-GAAP Financial Measure
In addition to our results determined in accordance with U.S. 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, U.S. 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 U.S. GAAP.
Our EBITDA was a loss of ($635,788) for the year ended December 31, 2024, as compared to a loss of ($5,387,063) for the year ended December 31, 2023.
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EBITDA by segment was prepared using the policies described in Note 13 of the Notes to Consolidated Financial Statements in this Annual Report. EBIDTA by segment for the years ended December 31, 2024 and 2023 was as follows:
| Antimony | For the years ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | $ Change | % Change | ||||||||||||
| Revenue | $ | 11,996,287 | $ | 6,230,976 | $ | 5,765,311 | 93% | ||||||||
| Cost of sales | (7,518,224 | ) | (8,977,319 | ) | 1,459,095 | 16% | |||||||||
| Gross profit | 4,478,063 | (2,746,343 | ) | 7,224,406 | 263% | ||||||||||
| Total operating expenses | (3,500,936 | ) | (3,111,946 | ) | (388,990 | ) | -12% | ||||||||
| Income (loss) from operations | 977,127 | (5,858,289 | ) | 6,835,416 | 117% | ||||||||||
| Total other income (expense) | 673,471 | 736,378 | (62,907 | ) | -9% | ||||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Income (loss) | 1,650,598 | (5,121,911 | ) | 6,772,509 | 132% | ||||||||||
| Interest expense | - | (6,504 | ) | 6,504 | 100% | ||||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Depreciation and amortization | 705,047 | 684,644 | 20,403 | 3% | |||||||||||
| EBITDA | $ | 2,355,645 | $ | (4,443,771) | $ | 6,799,416 | 153% |
| Zeolite | For the years ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | $ Change | % Change | ||||||||||||
| Revenue | $ | 2,941,675 | $ | 2,462,179 | $ | 479,496 | 19% | ||||||||
| Cost of sales | (3,584,310 | ) | (2,958,160 | ) | (626,150 | ) | -21% | ||||||||
| Gross profit (loss) | (642,635 | ) | (495,981 | ) | (146,654 | ) | -30% | ||||||||
| Total operating expenses | (1,973,542 | ) | (600,092 | ) | (1,373,450 | ) | -229% | ||||||||
| Income (loss) from operations | (2,616,177 | ) | (1,096,073 | ) | (1,520,104 | ) | -139% | ||||||||
| Total other income (expense) | (13,063 | ) | (15,664 | ) | 2,601 | 17% | |||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Income (loss) | (2,629,240 | ) | (1,111,737 | ) | (1,517,503 | ) | -136% | ||||||||
| Interest expense | 8,869 | 8,283 | 586 | 7% | |||||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Depreciation and amortization | 364,209 | 258,741 | 105,468 | 41% | |||||||||||
| EBITDA | $ | (2,256,162 | ) | $ | (844,713 | ) | $ | (1,411,449 | ) | -167% |
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| All Other | For the years ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | $ Change | % Change | ||||||||||||
| Revenue | $ | - | $ | - | $ | - | - | ||||||||
| Cost of sales | (368,510 | ) | (102,460 | ) | (266,050 | ) | -260% | ||||||||
| Gross profit | (368,510 | ) | (102,460 | ) | (266,050 | ) | -260% | ||||||||
| Total operating expenses | (383,252 | ) | (12,179 | ) | (371,073 | ) | -3047% | ||||||||
| Income (loss) from operations | (751,762 | ) | (114,639 | ) | (637,123 | ) | -556% | ||||||||
| Total other income (expense) | - | - | - | - | |||||||||||
| Income (loss) | (751,762 | ) | (114,639 | ) | (637,123 | ) | -556% | ||||||||
| Interest expense | - | - | - | - | |||||||||||
| Depreciation and amortization | 16,491 | 16,060 | 431 | 3% | |||||||||||
| EBITDA | $ | (735,271 | ) | $ | (98,579 | ) | $ | (636,692 | ) | -646% |
| Consolidated | For the years ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| December 31, 2024 | December 31, 2023 | $ Change | % Change | ||||||||||||
| Revenue | $ | 14,937,962 | $ | 8,693,155 | $ | 6,244,807 | 72% | ||||||||
| Cost of sales | (11,471,044 | ) | (12,037,939 | ) | 566,895 | 5% | |||||||||
| Gross profit | 3,466,918 | (3,344,784 | ) | 6,811,702 | 204% | ||||||||||
| Total operating expenses | (5,857,730 | ) | (3,724,217 | ) | (2,133,513 | ) | -57% | ||||||||
| Income (loss) from operations | (2,390,812 | ) | (7,069,001 | ) | 4,678,189 | 66% | |||||||||
| Total other income (expense) | 660,408 | $ | 720,714 | (60,306 | ) | -8% | |||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Income (loss) | (1,730,404 | ) | (6,348,287 | ) | 4,617,883 | 73% | |||||||||
| Interest expense | 8,869 | 1,779 | 7,090 | 399% | |||||||||||
| Income tax expense | - | - | - | - | |||||||||||
| Depreciation and amortization | 1,085,747 | 959,445 | 126,302 | 13% | |||||||||||
| EBITDA | $ | (635,788 | ) | $ | (5,387,063 | ) | $ | 4,751,275 | 88% |
Liquidity and Capital Resources
Our mission is to service our employees, customers, and vendors well and grow our business profitably both organically and through strategic acquisitions and partnerships to increase shareholder value. The Company is focused on generating positive cash flow to fund its mission.
One method of generating cash is through the sale of common stock, warrants, debt, and other investment vehicles, which the Company has been successful at executing in the past. During 2024, the Company generated proceeds from the sale of its common stock, net of issuance costs, of $2.8 million, and $1.5 million through the exercise of warrants. However, our ability to access capital or raise funds 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.
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The Company could also receive funds from the U.S. Government for initiatives related to facility expansion and mining exploration and development. However, there is no assurance that U.S. Government funding will be accessible to the Company.
In addition, the Company continues to review each segment’s operational and financial results for opportunities to improve cash flow and to make informed decisions that benefit the Company overall.
Our cash and cash equivalents balance at December 31, 2024 was $18,172,120. 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 intend to continue to invest in our employees, customers, infrastructure, and operations with the goals of increasing production, decreasing costs, and growing revenue profitably. Also, we intend to fund our cash requirements in 2025 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.
Cash flow information for the years ended December 31, 2024 and 2023 was as follows:
| Cash Flow Information | For the years ended | |||||||
|---|---|---|---|---|---|---|---|---|
| December 31,2024 | December 31,2023 | |||||||
| Net cash provided (used) by operating activities | $ | 2,220,303 | $ | (4,750,026 | ) | |||
| Net cash provided (used) by investing activities | (42,073 | ) | (1,341,713 | ) | ||||
| Net cash provided (used) by financing activities | 4,138,033 | (1,071,292 | ) | |||||
| Total net cash flow increase (decrease) | $ | 6,316,263 | $ | (7,163,031 | ) |
Cash flow provided by operating activities improved by $7.0 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to better operational management resulting in a lower net loss, better inventory management, and increased trade payables. Trade payables increased at December 31, 2024 as compared to December 31, 2023 mainly due to the increased cost of antimony ore linked to the antimony market price.
Cash flow used by investing activities decreased by $1.3 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to less fixed asset purchases and the sale of our personal residence. See Note 6 and Note 13 of the Notes to Consolidated Financial Statements in this Annual Report for further information.
Cash flow provided by financing activities improved by $5.2 million for the year ended December 31, 2024, as compared to the year ended December 31, 2023, primarily due to proceeds received in 2024 from the sale of the Company’s stock, net of issuance costs, of $2.8 million, and $1.5 million from the exercise of warrants and the payment of a dividend in 2023 of $787,730 to the holders of 1,692,672 shares of Series D Preferred stock.
Off-Balance Sheet Arrangements
The Company has no significant off-balance sheet arrangements.
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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 if needed. However, it is possible that changes could occur in the near term that could adversely affect the estimates of salvage values and future cash flows 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 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 if 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. |