What changed in this filing

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Item 7. Management’s Discussion and Analysis

2024-04-12 compared with 2023-07-18 · 200 added, 223 removed, 52 unchanged (89% of the section changed)

Management’s Discussion and Analysis and Results of Operations

The following discussion should be read in conjunction with our financial statements and related notes thereto as filed with this report.

SELECTED FINANCIAL DATA.

Statement of Operations Information:

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.

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.

Consolidated Financial Information

Comparison of the Years Ended December 31, 2023 and 2022

Consolidated Statements of Operations Information:

For the year ended

Costs of revenues

Gross profit (loss)

$ (3,344,784 )

Total operating expenses

Income (loss) from operations

Other income (expense)

$ (7,069,001 )

Total other income (expense)

Income tax expense

Net income (loss)

$ (6,348,287 )

Weighted average shares of common stock (basic)

Weighted average shares of common stock (diluted)

Balance Sheet Information:

Consolidated Balance Sheet Information:

Working capital

2 unchanged sentences

(33,070,332 )

Stockholders’ equity

For the year ended December 31, 2022, the Company reported net income of $428,661 after depreciation and amortization of $909,220, compared to a net loss of $60,469 for 2021 after depreciation and amortization of $880,880.

During the year ending December 31, 2022, the most significant factors affecting our financial performance were as follows:

A significant increase in the amount of sales of antimony, up 53% from the prior year.

A purchase option agreement for the Wadley mines signed in June 2022 along with an 8-month mining and due diligence period providing exclusive rights to extracted mineral.

Until June 2022, the Wadley mine had halted USAC’s ability to purchase ore.

The purchase option agreement due diligence period has been extended to October 15, 2023.

The continued efforts in mechanical improvements associated with sales of zeolite from Bear River Zeolite.

Mitzi Hart’s replacement of Marilyn Sink as Plant Manager at U.S.

The hiring of Richard Lyon as Plant Supervisor at Bear River Zeolite along with the continued efforts in trucking coordination and sales management of Gretchen Lawrence

Increased trucking prices and decreasing trucking availability.

Difficulties in sourcing labor in the US and Mexico due to the Covid pandemic and government incentives resulting in a significantly smaller labor pool.

The completion of payment and disposal for the removal of legacy slags at the smelters in Mexico and the United States.

The sale of finished antimony ingots directly to customers from our Madero Smelting facility.

The purchase of several large salt sheds for storage of ore at Bear River Zeolite in order to eliminate interruptions in production during winter and the wet seasons.

The purchase of several key pieces of rolling stock equipment at Bear River Zeolite including:

A Cat 235 excavator, a Cat 12H road grader, a Cat 740 articulated haul truck, a Cat D8T dozer with dual rippers.

The purchase of a new modern 2.5-foot cone crusher to replace our older cone crusher at Bear River Zeolite.

The construction of a 100’ by 50’ warehouse at Bear River Zeolite.

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Our plan for 2023 is as follows:

Continue processing the 2,000 tons of mined and shipped rock from the Los Juarez property at our Puerto Blanco flotation facility.

Continue to process ores and concentrates at our Madero smelter facility.

The purchase of new forklifts and scales at Madero smelter facility.

The relining of several short rotary furnaces along with the repair of equipment at the Madero smelter facility

The installation of two new electric furnaces at the Montana facility for increase production of antimony trisulfide.

Additional mapping and additional geological studies at the Los Juarez property in order to ascertain more information about the mineralization indicated in our preliminary geophysical and geochemical work.

The continued effort to source additional antimony from Honduras, Nicaragua, and especially Guatemala as well as sources in the United States, Canada, Alaska, and Mexico.

Continuation of the mining of the Soyatal claims for the production of antimony trisulfide given that preliminary testing of the concentrates resulted in acceptable grade and acceptably low contaminants to achieve military specification.

Continuation of the supply of sized antimony metal to Ambri in accordance with our letter of intent of 2020 and continued communication regarding potential of further cooperation.

Continuation of the processing of Soyatal ore to produce concentrates with the goal of testing antimony grade and contaminant content for the potential of an auxiliary source of antimony trisulfide while the Sierra Guadalupe property is started into production as the primary source.

If the Soyatal concentrates pass testing, the decision to retain the Soyatal claims will be made.

In addition to the processing goals stated above, the Company intends to focus on and significantly increase its production, capacity, and sales of zeolite at its subsidiary Bear River Zeolite.

The addition of two more winter-storage buildings (one located between the mine and the mill and the other located near the mine) is planned.

Salt sheds for these ore storage locations are planned to eliminate the necessity of the use of tarps for keeping the zeolite dry during the winter and rainy seasons.

The building near the mine also allows a location for the regular service maintenance of the mine equipment in winter and rainy months.

The crushing rate is anticipated to increase 2-3 times with the addition of our new cone crusher and a host of improvements to the crushing equipment and parts downstream.

This includes the updating of nearly all of our screens, along with likely the replacement of one of our hammermills with a crusher better suited for a more efficient production of our main product.

These decisions will be aided by several sieve and aggregate flow studies.

The Company plans to increase its efficiency and volume of crushed ore by means of the use of the new mining equipment purchased in 2022 along with improved blasting techniques and determination of the best balance between blasting and ripping.

The enhancement of the dust collection and dust control also is planned and should enhance our ultra-fine production.

The following are highlights of the significant changes during 2022:

The sale of antimony during 2022 was 1,394,036 pounds compared to 911,079 pounds in 2021, an increase of 53.0%.

The average sales price of antimony during 2022 was $5.47/lb.

compared with $5.29/lb.

in 2021, an increase of $0.18/lb.

(a 3.5% increase).

During the beginning of 2023, the Rotterdam price of antimony is approximately $5.15/lb.

We are producing and buying raw materials, which will allow us to ensure a steady flow of products for sale.

Our smelter at Madero, Mexico, was processing primarily ores from the Wadley mines in 2022 under a clause that accompanies a purchase option agreement.

Our smelter in Montana was producing material from both Mexico and our North American sources in 2022.

Raw materials from our North American supplier were reduced in 2022 due to plant maintenance, an unexpected equipment failure, the effects of Covid, labor supply shortages, and shipping difficulties across the border due to political reasons.

We produced and sold three truckloads of ingots of antimony metal, each containing 20 metric tons, in the first half of 2022 that were shipped directly to customers in the United States from our Madero smelter.

This will significantly reduce our production and shipping costs compared to finishing the ingots in Montana.

We are proceeding with further mapping and geological work to augment our initial geophysical, geochemical, and geological survey of the Los Juarez property to better understand its potential value.

Page 47 of 91

During 2022, the Company sold 13,047 tons of zeolite compared to 11,747 tons in 2021, an increase of 1,300 tons (11.1%).

Bear River Zeolite (“BRZ”) realized a gross profit of $339,907 (10.8% of zeolite sales) in 2022 compared to a gross profit of $340,806 (13.1% of sales) in 2021.

Net income for the BRZ segment was $141,496 for the year ended December 31, 2022 compared to $193,674 for the year ended December 31, 2021.

The increase in production but decrease in profit were attributable to outpacing of costs to increase in pricing.

As an example, the price of packaging materials, diesel, labor, electricity, oil, etc.

all increased substantially in 2022.

To address this, the Company plans to increase its price per ton of offered zeolite and concentrate its efforts more on bulk orders that minimize the focus of labor on packaging.

Additionally, the Company plans to increase production volumes at Bear River Zeolite in 2023 to address growing customer demands.

Corporate-wide

During the year ending December 31, 2022, the following transactions had a material impact on the Company’s financial performance:

The signing of a purchase option agreement for the exclusive rights to all extracted mineral from the Wadley mines for an 8-month period allowing the Company to acquire antimony ore and ascertain grade and tonnages in advance of a decision to purchase affording the Company to accumulate more lots of antimony at its smelting facility in Madero than have ever been accumulated.

The hiring of Richard Lyon as Plant Supervisor at Bear River Zeolite providing far better and more consistent oversight of personnel and operations with guidance from management in conjunction with the use of funds to substantially update and improve plant infrastructure.

The sustained and favorable increased price of antimony.

The purchase of a new and modern cone crusher and a host of new equipment at Bear River Zeolite to improve production and performance.

The re-initiation of payments towards the acquisition of the Sierra Guadalupe property.

The appointment of 3 new members to the Company’s Board of Directors, Tim Hasara, John C.

Gustavsen, and Gary C.

Page 48 of 91

Results of Operations

Operational and financial performance

Financial and operational metrics of antimony for the year ended December 31, 2022 and 2021 was as follows:

Total stockholders’ equity

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.

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.

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

Total revenue -antimony

Revenue - processing

Total revenue – antimony segment

Gross profit - antimony

of antimony metal sold

Average sales price/lb.

Average cost/lb.

Average gross profit/lb.

During the year ended December 31, 2022, the average sales price for antimony increased $0.18 per pound compared to the year ended December 31, 2021.

Gross profit per pound increased $0.78 per pound over the year ended December 31, 2021.

Due to its antimony production and sales along with a favorable antimony price, the Company enjoyed its first profitable year since 2018.

We cut costs by selling finished ingots directly to customers in the United States from our Mexican smelter eliminating additional shipping and processing costs at our Montana facility.

The first two quarters of 2022 each recognized more net profit than any previous year in the Company’s history.

The Company experienced a decrease in production in the third quarter due to a temporary decrease in feed for two reasons.

First, there was a scheduled shut-down by our North American supplier that was followed by equipment failure at their facility.

In addition to this, the supplier reported having difficulties with labor supply.

Second, the decrease in supply corresponded with less sourcing in Mexico during the negotiation phase regarding our purchase option agreement for the Wadley property.

The delay between the reception of ore at the Mexican Smelter combined with the aforementioned delay carried over into fourth quarter of the year.

The Company processed and sold 37,485 lbs.

of antimony trisulfide as part of a tolling agreement.

During this period, the Company worked on and solved several problems that it was having with its processing of antimony concentrate from Mexico into antimony trisulfide crystal for sale to the munitions market and the Defense Logistics Agency (“DLA”).

In addition, two more furnaces were purchased to give the Company back-up in anticipation of planned maintenance.

Mitzi Hart, who assumed the role of Plant Manager and also assistant Sales Director for antimony, has extensive previous experience in sourcing trucking.

This resulted in decreasing our trucking costs considerably.

Also, the Company was able to offer a discount for clients willing to source their own trucking which resulted in several clients who now provide their own freight.

Financial and operational performance of zeolite for the year ended December 31, 2022 and 2021 was as follows:

$ (1,727,190 )

Gross profit (loss)

$ (3,064,606 )

$ (4,569,722 )

Pounds of antimony sold

Average sales price per pound

Average cost per pound

Average gross profit per pound

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,

Total revenue - zeolite

Gross profit - zeolite

Gross profit (loss)

Tons of zeolite sold

Average sales price/ton

Average cost/ton

Average gross profit/ton

Sales volume of zeolite for the year ended December 31, 2022 increased 1,300 tons over the year ended December 31, 2021.

Average sales price per ton increased $20.77 for the year ended December 31, 2022 over the comparable period ending December 31, 2021.

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At Bear River Zeolite, between 2021 and 2022, despite an increase in sold tons, gross profit decreased slightly.

This was due to the increase in costs combined with a delay in raising our prices in order to retain particular clients that had pre-existing price agreements.

The strategy going forward will be to increase our sales price while significantly increasing production and sales.

The overall strategy for increasing production started with the mine and mining techniques and utilizing the newly purchased rolling stock (mining and trucking equipment).

The Company experimented with ripping versus blasting and concluded at first that ripping was superior.

However, due to the distribution of rock size from ripping, it was concluded by the end of 2022 that ripping caused more delay in processing owing to the necessity to drill and break or blast oversized rock that would not fit in the jaw crusher.

Consequently, the primary technique that yields the fastest production from the mine through the mill is blasting.

Improvements to the blasting technique are scheduled for 2023.

The second phase of production improvements relate to the selection of the discharge size from the new cone crusher purchased in December.

Once the optimal size has been determined that corresponds to the most efficient rate of production and efficiency in product size, the plan is to work our way downstream through the secondary crushing circuit and then the screening.

Finally, the efficiency and production capacity of our packaging plant vs.

available labor for this plant will be addressed to match the increased zeolite production.

Precious Metals

Financial and operational performance of precious metals for the three months ended December 31, 2022 and 2021 was as follows:

Average sales price per ton

Average cost per ton

Average gross profit per ton

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.

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

Total revenue - precious metals

Gross profit precious metals

Gross profit (loss)

Ounces sold - gold

Ounces sold - silver

EARNINGS BEFORE INTEREST TAX DEPRECIATION AND AMORTIZATION

The Company utilizes Earnings Before Interest Taxes Depreciation and Amortization (“EBITDA”), a non-GAAP financial measurement which approximates free cash flow.

Our company-wide Earnings Before Interest Taxes Depreciation Amortization (“EBITDA”) was $1,369,095 for the year ended December 31, 2022, compared to EBITDA of $825,950 for the year ended December 31, 2021, a 65.8% increase.

Increase in gross revenue of $3,297,201 and increased gross profit of $1,157,585 were the primary drivers behind the EBITDA results in 2022.

Income from operations improved from a company-wide loss of $660,257 for the year ended December 31, 2021 to income from operations of $348,205 for the year ended December 31, 2022.

Primary drivers were increased antimony sales and, to a lesser extent, continued strong market prices for antimony and zeolite.

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EBIDTA schedules by business segment for the year ended December 31, 2022 and December 31, 2021 is presented as follows.

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

December 31, 2022

December 31, 2021

Gross antimony revenue

Year ended December 31,

$ (1,727,190 )

Cost of sales

Gross profit – antimony

Operating expenses

Gross profit (loss)

$ (3,064,606 )

$ (4,569,722 )

Total operating expenses

Income (loss) from operations

Non-operating income

Provision for income tax

$ (6,520,198 )

$ (6,542,788 )

Total other income (expense)

Income tax expense

Net income (loss) - antimony

$ (5,783,820 )

$ (5,919,818 )

Interest expense

Provision for income tax

Income tax expense

Depreciation and amortization

EBITDA - antimony

December 31, 2022

December 31, 2021

Gross zeolite revenue

$ (5,200,313 )

$ (5,990,123 )

Year ended December 31,

Cost of sales

Gross profit – zeolite

Operating expenses

Income from operations

Non-operating income (expense)

Net income – zeolite

Gross profit (loss)

Total operating expenses

Income (loss) from operations

Total other income (expense)

Income tax expense

Net income (loss) - zeolite

Interest expense

Income tax expense

Depreciation and amortization

EBITDA - zeolite

Page 51 of 91

Year ended December 31,

Precious Metals

Gross revenue precious metals

Cost of sales

Gross profit – precious metals

Operating expenses

Income from operations

Non-operating expenses

Net income – precious metals

Gross profit (loss)

Total operating expenses

Income (loss) from operations

Total other income (expense)

Net income (loss) - precious metals

Interest expense

1 unchanged sentence

EBITDA - precious metals

Gross revenue

Year ended December 31,

$ (2,351,552 )

Cost of sales

Operating expenses

$ (12,037,939 )

$ (9,048,517 )

Gross profit (loss)

$ (3,344,784 )

$ (5,340,974 )

Total operating expenses

$ (3,724,217 )

$ (1,647,985 )

Income (loss) from operations

Non-operating income

Provision for income tax

Net income (loss)

$ (7,069,001 )

$ (7,417,206 )

Total other income (expense)

Income tax expense

Net income (loss) - consolidated

$ (6,348,287 )

$ (6,776,948 )

Interest expense

Provision for income tax

Income tax expense

Depreciation and amortization

EBITDA – Company-wide

Page 52 of 91

LIQUIDITY AND FINANCIAL CONDITION

EBITDA - consolidated

$ (5,387,063 )

$ (6,756,158 )

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.

Cash Flows Summary

WORKING CAPITAL

3 unchanged sentences

For the year ended

Cash flow used by operating activities

Cash provided (used) by operations

$ (4,750,026 )

Cash flow used by investing activities

Cash flow provided (used) by financing activities

Net change in cash during period

Cash provided (used) by investing

Cash provided (used) by financing

Net change in cash and restricted cash for the year ended period

$ (7,163,031 )

As of December 31, 2022, the Company had cash and cash equivalents of hand of $19,117,666 which consisted of $19,060,378 in money market funds and deposit accounts along with $57,288 of restricted cash.

Net cash used by operating activities was $249,277 for the year ending December 31, 2022, compared with cash used by operating activities of $2,431,477 during the year ended December 31, 2021.

The $2,182,200 change in cash from operating activities is attributable to ongoing strong gross profit from antinomy sales.

Net cash used by investing activities of $1,785,661 included the purchase of a caterpillar for the Bear River Zeolite operation and ongoing construction of a new warehouse in Preston, ID.

Cash flow used by financing activities for the year ended December 31, 2022 was $267,725 compared to a cash flow provided by financing activities of $23,782,555 for the year ended December 31, 2021.

In 2021, the Company raised $23,342,178 from the issuance of common stock and warrants and $1,790,705 from the exercise of warrants by existing shareholders.

This capital raise and warrant exercise was not recurring during the year ended December 31, 2022.

For the year ending December 31, 2023, we are planning to use funds for

Continue with substantial upgrades to the Bear River Zeolite plant, including modernizing equipment in our crushing plant to include new screens, sorting, conveying, dust-control, and crushing equipment with increased number of safety mechanisms to avoid shut-downs and insure uninterrupted production.

Additionally, we plan to use funds to expand and update our packaging capacity both on-site and possibly the creation of an off-site packaging plant where we can source more labor.

All use of funds for Bear River Zeolite are for the express purpose of substantially increasing production and sales of zeolite.

Some of the use of funds at Bear River Zeolite will doubtlessly be applied to increasing labor costs and an increase in the number of workers.

The continuation of payment towards the completion of the purchase of the Sierra Guadalupe mining claims and surface rights.

Also, the payment towards the purchase of ore and assistance for establishing the extraction of mineral at this property for the purpose of both the synthesis of antimony trisulfide, antimony metal, and antimony trioxide.

The payment of the remainder of the amount due for the purchase of the Soyatal mining claims and purchase of ores from those claims for the synthesis of antimony trisulfide and antimony metal.

For the addition of a gravity separation circuit at the Madero Smelter for the upgrading of low-grade oxide ores.

The updating of equipment that has either rusted, or otherwise failed due to normal wear and tear including, but not limited to, the regular re-lining of furnaces.

At some point in the future, we intend to use funds to update the facility in such a way that it will be able to produce finished antimony oxide for sale directly to customers.

This will require a very large building to enclose our furnaces to shield them from rain, wind, and the weather.

Also, we will need to purchase some quality-control equipment for this purpose.

In Montana, to install two more electric furnaces;

to reline two more smelting furnaces, and to continue to source and pay for labor at a competitive rate and pay our limited crew what they are worth.

At Puerto Blanco, to continue to process ore into concentrate for synthesis into antimony trisulfide product.

For the regular purchase of consumables and reagents necessary to operate the flotation facility and lab.

To hire a certified geologist to do additional mapping and geologic work at the Los Juarez property to complete the geophysical, geochemical, and previous geological work that was done in order to help ascertain the value of the property.

To pay for taxes on all mining concessions.

To pay for all regular permitting fees associated with our holdings in Mexico and the United States.

To pay for new sources of potential antimony ore and continue to investigate new or alternative sources of antimony ore.

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$ (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 that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to its stockholders.

The Company has no significant off-balance sheet arrangements as defined by the SEC regulations.

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.

The value of unprocessed ore is based on assays taken at the time the ore is delivered, and may vary when the ore is processed.

We assay the ore to estimate the amount of antimony contained per metric ton, and then make a payment based on the Rotterdam price of antimony and the % of antimony contained.

Our payment scale incorporates a penalty for ore with a low percentage of antimony.

It is reasonably likely that the initial assay will differ from the amount of metal recovered from a given lot.

If the initial assay of a lot of ore on hand at the end of a reporting period were different, it would cause a change in our reported inventory, but would not change our accounts payable, reported cost of goods sold or net income amounts.

Our net income would not be affected.

Direct shipping ore (DSO) purchased at our Madero smelter is paid for at a fixed amount at the time of delivery and assaying, and is not subject to accounting estimates.

The amount of the accounting estimate for purchased ore at our Puerto Blanco mill is in a constant state of change because the amount of purchased ore and the percent of metal contained are constantly changing.

Due to the amount of ore on hand at the end of a reporting period, as compared to the amount of total assets, liabilities, equity, and the ore processed during a reporting period, any change in the amount of estimated metal contained would likely not result in a material change to our financial condition.

The asset retirement obligation and asset 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.

We make periodic reviews of the remaining life of the mine and other operations, and the estimated remediation costs upon closure, and adjust our account balances accordingly.

At this time, we think that an adjustment in our asset recovery obligation is not required, and an adjustment in future periods would not have a material impact in the year of adjustment, but would change the amount of the annual accretion and amortization costs charged to our expenses by an undetermined amount.

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.

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.

Quantitative and Qualitative Disclosures about Market Risk

Not applicable.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis