Business Overview United States Antimony Corporation (UAMY) is a diversified natural resource company that operates in the United States and Mexico, primarily focused on the production and sale of antimony, zeolite, and precious metals products. With a history dating back to 1970, UAMY has established itself as a key player in the critical minerals and specialty materials sectors, catering to a wide range of industries and applications.
UAMY's origins can be traced back to 1970 when the company was incorporated in Montana to mine and produce antimony products. In 1983, the company suspended its antimony mining operations in the U.S. but continued to produce antimony products using foreign sources of antimony ore. In 1998, the company formed US Antimony de Mexico, S.A. de C.V. (USAMSA) to smelt antimony in Mexico, and in 2005, it formed Antimonio de Mexico, S.A. de C.V. (ADM) to explore and develop antimony and precious metal deposits in Mexico.
In 2000, the company formed Bear River Zeolite Company (BRZ) for the purpose of mining and producing zeolite in Idaho. Zeolite is a group of industrial minerals that are used in a variety of applications, including soil amendment and fertilizer, water filtration, sewage treatment, nuclear waste and environmental cleanup, odor control, gas separation, and animal nutrition.
UAMY's operations are organized into four main segments: United States antimony, Mexico antimony, zeolite, and precious metals. The company's antimony products, including antimony oxide, antimony metal, and antimony trisulfide, are used in a variety of industries, such as plastics, rubber, fiberglass, textile goods, paints, coatings, and paper. The zeolite segment focuses on the production and sale of zeolite products, while the precious metals segment recovers gold and silver from the company's antimony processing operations.
In May 2012, the company's shares of common stock started trading on the NYSE MKT (now NYSE AMERICAN) under the symbol UAMY, marking an important milestone in its growth and visibility in the public markets. This listing has provided UAMY with increased access to capital and enhanced its profile among investors and industry peers.
The company has faced some regulatory challenges in recent years. In 2015, the Mexican tax authority SAT initiated an audit of USAMSA's 2013 income tax return. In October 2016, SAT assessed the Company 13.80 million pesos (approximately $666,400 at the time) based on the disallowance of specific costs deducted on the 2013 USAMSA income tax return. This assessment was settled in 2018 with no assessment due from the Company. However, in 2019, SAT re-opened its assessment of USAMSA's 2013 income tax return and assessed the Company 16.30 million pesos (approximately $865,000 at the time) in November 2019. The Company appealed this assessment, demonstrating its commitment to addressing regulatory challenges and maintaining compliance with local tax authorities.
In a significant development, on March 11, 2024, UAMY announced the shutdown of USAMSA operations, which were part of the antimony segment, and declared its intent to sell the USAMSA subsidiary. This decision marks a strategic shift in the company's operations in Mexico. Despite this change, UAMY will maintain its existing Los Juarez mining claims and concessions in Mexico, which are included in the ADM subsidiary. However, it's important to note that currently, the Company has no active operations in Los Juarez.
Financial Performance Over the past three years, UAMY has demonstrated a mixed financial performance. In the most recent fiscal year, the company reported annual revenue of $8.69 million, with a net loss of $6.35 million. The annual operating cash flow was negative $4.75 million, and the annual free cash flow was negative $6.28 million.
For the first nine months of 2024, UAMY reported revenue of $8.07 million, a 23.5% increase compared to the same period in 2023. The company's gross profit also increased by 107.5% to $2.16 million during this time. Despite these positive developments, UAMY's net loss for the first nine months of 2024 was $652,700, compared to a net loss of $85,560 in the same period of 2023.
In the most recent quarter, UAMY reported revenue of $2.42 million, a 17.3% increase year-over-year, driven by higher antimony sales volume and demand. The quarterly net loss was $727,510. Gross profit increased 64.8% due to improved efficiencies with the higher sales volume, partially offset by increased maintenance and other related costs in the Zeolite business.
UAMY's performance by geographic markets shows that the company sells its products primarily in the U.S. and Canada. For the first nine months of 2024, domestic revenues were $6.35 million (78.7% of total) and foreign revenues were $1.72 million (21.3% of total).
Segment Performance United States Antimony Segment: For the nine months ended September 30, 2024, this segment generated $5.38 million in revenue, up 23.5% compared to the prior year period, and had a gross profit of $2.22 million, a 119.9% increase. The improved results were driven by higher sales volume from increased demand for antimony oxide and metal. The average sales price per pound decreased slightly due to lower pricing on customer-owned antimony ore processing, but the company was able to improve cost efficiencies with the higher volume.
Zeolite Segment: For the nine months ended September 30, 2024, this segment generated $2.28 million in revenue, up 17.5% year-over-year, driven by increased demand and higher average selling prices. However, gross profit decreased 130.5% compared to the prior year period due to higher costs for maintenance, backup equipment leases, and other expenses related to repairing older machinery during production downtime.
Precious Metals Segment: For the nine months ended September 30, 2024, this segment generated $404,050 in revenue, a 66.7% increase over the prior year period, with a corresponding 71.9% increase in gross profit to $386,490. The higher revenue and profitability were attributable to increased ounces of gold and silver sold compared to the first nine months of 2023.
Liquidity The company's balance sheet as of September 30, 2024, showed total assets of $23.56 million and total liabilities of $4.63 million, resulting in a strong current ratio of 6.24 and a quick ratio of 5.84. The debt-to-equity ratio stands at 0.045, indicating a healthy financial position. UAMY reported cash and cash equivalents of $12.97 million.
The company has been focused on improving working capital management, which contributed to a $1.58 million improvement in operating cash flow compared to the prior year period. UAMY also generated $141,710 in cash from investing activities, a $1.48 million improvement, primarily due to the sale of a non-core asset in the zeolite segment and lower capital expenditures. The company believes its current cash and cash equivalents, along with cash generated from operations, will be sufficient to fund its cash requirements for the next 12 months.
Operational Highlights One of the notable achievements for UAMY in recent years has been the significant operational improvements made at its Bear River Zeolite (BRZ) facility in Idaho. The company has implemented enhancements to its production processes, safety, and equipment, leading to increased product throughput, improved customer delivery timing, and a safer working environment. These improvements have contributed to the growth of the zeolite business, which has not seen similar progress in prior years.
In the antimony segment, UAMY has faced challenges in securing reliable international sources of antimony ore due to China's tightening grip on the global supply of critical minerals. To address this, the company has been actively pursuing new partnerships and sourcing channels, including exploring antimony deposits in Alaska and Ontario, Canada. UAMY has also been in discussions with the U.S. government regarding potential funding and support for its domestic antimony operations, as the company is the only significant U.S. producer of antimony products.
Future Outlook and Strategic Initiatives While UAMY did not provide specific financial guidance for future periods, the company has outlined several strategic initiatives aimed at driving growth and securing critical mineral supply:
1. Expanding sales for the Bear River Zeolite (BRZ) business by adding new sales personnel and targeting new markets like the U.S. government and water treatment facilities.
2. Pursuing acquisitions in the zeolite business, with one potential acquisition currently being evaluated.
3. Aggressively securing new antimony feedstock supply from various international sources, with the goal of having material available for processing by the end of 2024.
4. Rapidly acquiring antimony and other critical mineral mining claims in Alaska and Canada to develop as new sources of supply.
5. Pursuing funding and sales opportunities with the U.S. government for antimony, zeolite, and other critical minerals.
Risks and Challenges UAMY's operations are subject to various risks and challenges, including:
1. Reliance on foreign sources of antimony ore: The company's historical reliance on foreign sources of antimony ore, particularly from China, has exposed it to supply chain disruptions and volatile changes in world market prices.
2. Regulatory and environmental compliance: As a mining and processing company, UAMY must navigate a complex regulatory landscape and ensure compliance with environmental regulations and health and safety standards.
3. Volatile commodity prices: The prices of antimony, zeolite, and precious metals are subject to fluctuations in global markets, which can impact the company's profitability.
4. Competitive landscape: UAMY faces competition from both domestic and international players in the antimony, zeolite, and precious metals markets.
5. Dependence on key customers: A significant portion of UAMY's revenue is derived from a limited number of large customers, which could pose risks if these relationships are disrupted.
Conclusion Despite the challenges faced by UAMY, the company's strategic initiatives and operational improvements in recent years suggest a promising outlook. The company's focus on enhancing its domestic antimony supply, diversifying its international sourcing channels, and capitalizing on the growing demand for critical minerals and specialty materials like zeolite could position it for future growth.
Furthermore, UAMY's strong financial position, with a healthy current ratio and low debt-to-equity ratio, provides the company with the financial flexibility to invest in its operations and pursue new opportunities.
While UAMY's recent financial performance has been mixed, the company's efforts to streamline its operations, expand its product portfolio, and adapt to the evolving market dynamics are encouraging. As UAMY continues to navigate the complex landscape of critical minerals and specialty materials, investors may want to closely monitor the company's progress and its ability to capitalize on the growing demand for its products.
Overall, United States Antimony Corporation (UAMY) appears to be a promising play in the critical minerals and zeolite sectors, with a focus on domestic production, international diversification, and operational excellence.