United States Antimony Corporation (UAMY) Earnings Call Transcript & Summary

Greetings. Welcome to the U.S. Antimony Corporation Company Update and Investor Call. [Operator Instructions]. Please note, this conference is being recorded. I will now turn the conference over to your host, Gary C. Evans, Lead Director of U.S. Antimony. Gary, please go ahead.

Thank you, Paul, and thank all of you for dialing in to actually our first call for calendar year 2023. On the call with me today is our Chairman and CEO, John Gustavsen as well as another board member, Joe Bardswich. These fellows obviously have been around. And Gus is up at our headquarters in Montana, and Joe is calling from Arizona, and I'm actually calling from Florida. So we're all here today to give you a brief overview. There has been a lot of changes with respect to our Board composition beginning last Friday, we filed an 8-K concerning Dr. Corby Anderson. We determined that the articles of corporation of our company set out the maximum number of directors at 7. So the company has determined that Dr. Anderson was not effective, his election and the appointment has been rescinded. So that was our first change that occurred on Friday, our second change occurred on Friday as well, which was our President and Board member, Russell Lawrence, resigned from the company, both as the President and as a director. And then our third director change occurred yesterday, Hart Baitis, who has been a longtime Director of the company, resigned. So that reduced what we thought last week was 8 directors down to 5. So we have 5 board members today, 2 of which are relatively new being Tim Hasara who came on last year, about 2 or 3 months before I did. I came on in November. So we have 3 established directors that have been on for a while and 2 new ones. We definitely want to talk a little bit about Russ and Hart. Those 2 fellows had made some significant contributions to the company. I think Russ had been involved with the company since he was in high school. And actually was hired, I think, in 2005. So his tenure was long and Gus knows him much better than I do. And I would like to turn the call over to Gus to talk a little bit about Russ and Hart and give them our thanks for serving on the company's Board and in management positions as well.

Okay. Thanks, Gary. Russ Lawrence did started working full time in about 2005. Prior to that, he worked off and on as his education allowed. At any rate, he works mainly in the Mexican operation. He built the flotation plant at Puerto Blanco and then he built the smelter at Madero. Russ managed the operations at Madero, built a strong management team and a strong office staff there. In 2020, Russ became the President of USAC and worked tirelessly to reduce costs, renegotiate supply contracts and improve operations company-wide. We thank Russ for his service and his contributions and wish him all the best in his future endeavors. As for Hart, Hart joined the Board in 2013, he has a doctorate in geology and many other certifications. Hart Baitis and John Lawrence were the best of friends. He and John visited many antimony and precious metal properties together and Hart oversaw the geological work done on the Los Juarez property. Hart also investigated to other properties on his own on behalf of the company. Upon John's death, Hart became an important resource to Russ Lawrence and Russ valued Hart's advice very much. We also thank Hart for his services and wish him a bright future.

Thank you, Gus. And as most of you know, Russ is the son of John Lawrence, who passed away 3 years ago, who was the founder of the company. So obviously, a lot of tenure there. And again, we want to thank both Russ and Hart for their tireless contributions. I thought I would try to give just a quick overview of the company for some new callers that may be on today and to remind everybody what we're all about. We have material properties in the company, the antimony smelter and precious metals plant. We have up in Sanders County, Montana, which is where Gus is right now. That's where our corporate headquarters is. We obviously also have the Los Juarez antimony property that's down and associated with the Madero smelter and the Puerto Blanca flotation mill in Mexico. And then our zeolite is at the Bear River mining property that's there in Idaho. So that's kind of a summary of the primary assets of the company. As a reminder to everybody, antimony mining and milling operations in the U.S. were pretty much curtailed back in 1983 due to a continued decline in the price of antimony. So we are currently purchasing foreign raw antimony materials and extracting our own raw materials from our properties in Mexico, and we have a number of properties down there, and we will continue to produce antimony metal and oxide sodium and antimony trisulfide and precious metals from our processing facility that's located there in Thompson Falls Montana. So as everybody, I think on the call knows today, we filed -- our Form 10-K was filed this morning before the market opens. It was obviously late by about 3 months, 3.5 months, and I'll go into some of those reasons here in a bit. But what I thought I would do is just give you some quick highlights of the financial numbers that were indicated in the Form 10-K. It was an excellent year, probably the best year I'm aware of for the company. The company reported revenues of a little over $11 million, which is up 43% from 2021 of $7.7 million. The cost of revenues only went up 31% to a little over $9 million versus $6.9 million in the prior year. So that enabled the company to generate a much better gross profit. Gross profit was just a hair under $2 million versus $838,000 in 2021, and that's a 138% increase. And Total operating expenses only went up 10% from $1.5 million in 2021 to $1.6 million in 2022. So when you take all of that into account, being higher revenues, less expenses, both on the operating side and on other expense side, we had a net income of $429,000 versus a loss of $60,000 in 2021. And that all occurred with just a very small increase in weighted shares outstanding, which only went up 3.3%. So all in all, I think everybody can say that for when you look at U.S. Antimony's history, this was a stellar year. The other thing that obviously is quite important is our working capital. At year-end, it was $19.4 million, slightly down from the $21.5 million in 2021. So that's another healthy benefit and by the way, our auditors. When we filed our 10-K this morning gave us a completely clean opinion. There's no point of concern qualifications. So let's talk just a little bit about antimony and then talk a little bit about Zeolite and I'll give you some specific numbers related to those. So one of the big factors for the increase in revenues in 2022 was the sale of antimony. We sold right at 1.4 million pounds versus 911,000 pounds in 2021, and that's an increase of 53%. So if you want to peel back the onion and look at what really caused the company's numbers to look so good last year, it was the sale of antimony. And when we start looking at the prices for antimony they weren't up that much, only a 3.5% increase. So 2021 price per pound was $5.29, 2022 was $5.47. I will tell you the price per pound in 2023, even though I'm not going to give you any financial numbers for first or second quarter, we'll talk about that in a minute. But the price per pound is slightly down. It's down to $4.97 in 2023. So that is one reason that we had such a stellar year in antimony. Now let's jump over to Zeolite. Zeolite, had an increase of 11.1% in tonnage, that's tons of zeolite compared to 2021. But the gross profit in 2022 was equal to 2021, even though we sold 11% more tonnage. So what does that mean? It means that our costs were outpacing the growth in revenues. And that's one of the things that your management, your Board is very focused on, and I'll talk about that here in a bit. So we do know that if we could increase sales of Zeolite, we believe we have the market to sell that product. And we're trying to do our best to increase those sales. There's changes that Russ made actually earlier this year. And as we enter the second and third quarter that we hope will be realized. And in fact, we'll be talking about that here in a bit. So the Zeolite, we believe, is a real opportunity for the company and we think there's a lot of new products that can possibly be brought to bear. And we're working on that very hard and we'll talk about that. So let's just break down real quick on antimony sales and zeolite sales and then I'll kind of be done with the financial overview. If you look at sales of antimony in 2022, as I said, they were up 56% at $7.5 million versus $4.8 million. And Again, that's really related to tonnage sold, not necessarily price. With respect to Zeolite, our sales were $3.1 million versus $2.6 million. It's up 21% and again, that is predominantly related to tonnage sold, up 11%. The average price was only up at 9%. So because we have such a high demand for zeolite from a number of different companies, we are going to slowly began increasing prices. We did that with one customer here recently. And so I think that is one of the objectives. Another is we know that we need to streamline the operations at BRZ especially as it relates to the packaging and boxing of orders for one of our customers, especially. And so we actually have a trip planned to Idaho next week. 4 of us are going, being the 3 people on this call and our largest customer. And the purpose of that meeting is to look at the plant, what can we do differently and look at how we can automate things. And so the Board has made a decision to hire a new divisional manager for the zeolite division. We've got an executive search firm that we're negotiating with to begin that exercise. So we are serious from the standpoint of letting you as shareholders know that we think there's a great opportunity here, and we want to do everything we can to capitalize on it and hiring new personnel is one of the things that we need. And we -- this is rock crushing operation and having someone with expertise is very important. So let's talk a little bit about the first quarter timing and the second quarter timing. We do believe that we can get these first quarter numbers, which, again, are unaudited, the first and second quarter they have to be reviewed by our third-party accounting firm, but they don't have to be audited. I would say safely, within 30 days of the first quarter, hopefully less. And then I would say safely, we're within 30 days of the first quarter being filed or the second quarter being filed. So now that we got the 10-K out of the way. And so let's talk a little bit about why that took so long and while we were late. We had some people in our accounting department that weren't basically doing their jobs, and we had to make some changes that occurred in late January because we just weren't getting ready for the audit as we should have. So our CFO, our contract CFO, who we've had on board for a better part of the year, had to basically redo the numbers for 2022, and that slowed down the audit process, because of a lot number of regularities that were occurred during that audit and during that review, that's what delayed things. I think it's very, very important to note, though, not any financial numbers had to be changed from the first, second and third quarter filings. So whatever changes we found were so minor or so insignificant that no changes had to be made. So you should feel very comfortable as a shareholder that our financial numbers are in order. Again, we have a clean opinion. And while we were late, it's -- everything is copasetic. And so once we get the second first and second quarter numbers done, which again should all occur in the next 60 days, and we'll be off to the races and hopefully we'll never have to go down this path again. One of the things that the company has been weak on in the past has been internal controls. There's two of us now on the board being Tim Hasara and myself, that are deemed financial experts. We're very keen on internal controls. We've already begun making changes in that area. One of the things you've probably noticed is our new website. It's been up and running about a month, but we've got a whistle blower call on there. We've got -- we've made a lot of changes internally with respect to bookkeeping and wire transfers and banks and what have you, trying to meet the requirements of Sarbanes-Oxley as an NYSE-listed company to be sure that we meet those. Our goal by the end of 2023 is to have most, if not all of those internal controls fixed, and that is a high priority of the company. And that's one of the reasons we are late on this 10-K is that we didn't have the proper internal controls in place. And so we couldn't catch when there was irregularities going on. And we're going to fix that and that should be alleviated before too long. I know I get a lot of questions. I know other Board members do as well about our stock buyback program. That is spelled out explicitly in the 10-K that was filed this morning, but to summarize that real quickly. We spent $203,000 last year buying 419,000 shares. The average cost of that stock was $0.48 per share. So we have not bought any stock since then. We obviously could not with a late filing, and we still cannot with late filings on our Qs. But that is all the stock has been bought back at this point in time. I would also like to say that we, in an effort to improve further our internal controls and financial reporting. And one of the things that many Board members have mentioned in our meetings is that we don't have sufficient numbers by property, by asset, by mine, what have you. And so we have hired a new permanent Chief Financial Officer. He has given his notice. We've cut that deal early this week. He signed a letter of agreement with us. He had to give 30 days’ notice for his current job and he's been vetted by most of the Board and the management of the company, and we'll be starting here, like I say, within 2 to 3 weeks or 3 to 4 weeks. He has a very strong background in delving into cost accounting and that's something that we sorely need, especially as it relates to our operations down in Mexico, because there's a lot of interlap between mines and cost and people and what have you. So understanding that process and understanding that business down to a penny is what our goal is. And so in order for us to manage this company properly, we've got to have numbers that we can rely on, and that's one of the most important things that we need. So I think that, that will be a great new help. We've also begun an executive search, as I already mentioned, the divisional manager for BRZ who we're also beginning an executive search for a new Chief Executive Officer of the company that has a mining experience and the background to run this company to the next level where we want it to be. So a lot of changes have occurred in the last 4 or 5 days, a lot more changes are coming. We think they're all for the betterment of the company. We have a strong cohesive Board that is working very well together. We only have one objective in mind, and that is to improve our operations in a manner that increases the share price and we're all shareholders. And we, like you want to see the stock at a much higher level than where it presently is trending, and we're going to do everything in our power to do so. And so you see the changes we've made, changes we're going to make, and we hope to be able to report positive results from those changes in the near future. So I would ask if Gus or Joe has any comments to make. And then if they do or don't, then we can open up the floor to Q&A session. It's -- on this call for about 21 minutes and we're definitely going to cut it off probably in about 30 minutes. So that's one of the goals is to keep these calls a lot shorter than in the past. So Gus or Joe, do you have anything you'd like to say?

No, this is Gus. No, I don't have anything.

Gary, I'd just like to comment on Gus' comments on both Russ and Hart were good friends of mine and remain good friends of mine and certainly they are men of integrity. They did a great job, and my thanks for the shareholder goes out to them.

Great. Thank you. Okay, Paul. I think we're ready for our first question.

Certainly. At this time, we will be conducting a question-and-answer session. [Operator Instructions] The first question today is coming from [ Thomas Rusling ] from crystal investor.

I don't know what crystal investor is. I just announced that I was a personal investor and a personal friend of John Lawrence. He was my brother's roommate at college. We have become significant investors in the company. And I know it's been a very checkered career and a very challenging one. I would love to have conversations with individuals on a one-to-one basis rather than by asking some questions that might be considered unanswerable within this public forum. But I am just bubbling over with questions regarding the company. I think that the asset situation is incredible. I would -- just a simple question upfront. The proven reserve situation on my brother who is deceased. But he was a geologist, and he did some back of the envelope ciphering on the antimony reserves and came up with incredible numbers of what U.S. Antimony might come up with. So I'd be interested as to whether the company had any plans for doing proven reserves, which have not, to my knowledge, been done in the past? And the second question is, I thought that the gold and silver extraction was going to be on a huge acceleration upward. And I was looking at your 10-K and saw that those are actually significantly down year-over-year.

Okay. I'll try to answer a little bit, but Gus and Joe will be in a better position to answer most of it. With respect to the gold and silver, I know that, that has not been a focal point for the company. And Gus, I'm sure can respond to that, with respect to the reserves, those of you that do or do not know me, I was in the oil and gas business for 35 years, and we had to do reserve reports every year. It cost us a ton of money, but it was required as an oil and gas production company. And so that was one of my first questions is why don't we have reserve reports. And so one of our directors that just left, Hart was involved in, he's a geologist who was involved in doing some work there. And I believe that's going to continue. But it is one of our goals to begin doing some third-party evaluations of our reserves to better report our future because, as you know, reserve reports talk about the proven and the probable and the possible and then they talk about expected cash flows and future revenues and the capital costs associated with getting those reserves out of the ground. So that is something that we are weak on and something that we're hoping to change. And so Gus or Joe, I'll let you guys jump in.

I'll jump in.

Yes, go ahead.

Okay. The SEC has specific rules about announcing reserves. And just recently, they included the category of reserve. But to get a proven reserve is an extensive amount of drilling both sampling and ethane, et cetera, that is very, very expensive and that has to be followed by a feasibility report. We're a long ways from that. And at the present time under the SEC definition, we do not have any proven probable reserves. The zeolite is a little bit easier situation. But even there, we don't have a drill program that has ended up calculating our reserve there. We have figures from the U.S. geological survey of estimates, and that estimate is quite large, but that any influence I have and the Board of Directors will be towards that as being a first step is defining a reserve at the Bear River. Back to you, guys.

I think you covered it, Joe.

And then maybe gold and silver, any comment on that?

I think that's just a byproduct at this stage and Los Juarez has potential for gold and silver, but it's even further behind in terms of definition of the resource.

That is correct. There is some gold and silver in the sodium antimonate raw material that we buy, and we concentrate that and sell it back to the supplier. That's where our precious metals sales have come from this year -- well, 2022.

Hopefully, that helps with your questions.

Am I still live?

Please go ahead.

I calculated back of the envelope, pretax operating of roughly $0.18 per share. Does that equate with your results?

Let's see here. I have to pull the -- it should be in the 10-K on the financial statement.

It's a big report. I haven't made my way through it yet.

Yes. Let me see if I can tell you quickly. I'll tell you what I'll do. Let's go to the next question, and I'll be looking for it like you will Okay?

Thank you.

Thank you. The next question is coming from Joe Velasco , Joe is a private investor.

I'm a private investor. I've been in United States Antimony as an investor for about 2.5 years. And I'm just concerned like about some of the updates that I've been reading, particularly with the Department of Defense and Ambri Batteries. Do any new or anything possibly becoming an update as of more recent? Because I noticed on MarketWatch look all in different areas. So I really see very, very limited information on our company here. And I'm just curious what's going on.

Well, one of the things I think that we all recognize is that the company has some very unique opportunities that haven't been properly told to the government. The different agencies that are the ones that make awards and that make contracts with companies like ourselves. I think the fact that we are a U.S.-based company with sales of minerals that are non-China is a big plus. We've obviously -- the military has been affected with respect to all the artillery shells we've given to Ukraine in the Russia-Ukraine situation. So we think we're in a unique position of being a U.S.-based company with the kind of mines that we have available to meet some of the demands that are required from the Department of Defense, U.S. Army, et cetera. So one of our goals is to better educate those government entities as to what we have and the opportunities we have. We have, in the past, received some awards. And I know Gus has attended some congressional hearings. I think he got one coming up. I'll let him speak about that. But we're trying our best to better educate our U.S. government as to what we have and the opportunity that lies with a U.S.-based company. Gus?

We do not have a congressional thing coming up. We do have a visit from the Montana Mining Association head. It's not scheduled yet. We have agreed that it should be soon. I think that Joe has a conference that he's going to attend in the next few weeks. Is that correct, Joe?

Yes, on Friday, Gus, That's the House Natural Resources Committee meeting in Goodyear, a suburb of Phoenix. And basically, the topic is critical minerals, and I will attend, and I've been asked to send in a statement ahead of time in regards to antimony.

Okay. And antimony is on the United States critical minerals list.

Hopefully, that helps to answer your question, sir.

No, I appreciate that. And is there any information about -- because I know I've heard for a while about Ambri and also, I believe that they were utilizing your company also to refine a product to make it better for them. Is there any update with them because that seems to be a very, very important aspect of the new technologies that are out there, especially with this liquid battery. Is there anything with UAMY going on now? At least, any updates with that? Or is it still something that you guys are pursuing with them possibly in a long-term effect with them?

I can take that. We are in frequent contact with the senior management at Ambri. And so far, we have been their sole supplier of antimony. I can't really talk about numbers or future numbers. We're on a confidentiality basis with them. I will tell you, though, that we work very close and we speak frequently.

Okay. No, I appreciate that. And also, I do have one more question in terms of information that gets out to various entities, Google finance, like I said, MarketWatch balance, things of that nature. That -- I almost -- sometimes I get frustrated because I know how valuable UAMY is. But yet it just seems that we're not getting the acknowledgment out there to other investors of what actually is going on. As you people have described right now that there is much going on. And I'm just like concerned about that other investors may look and say, you know what, I don't hear anything from this company. I look at the charts, they look pretty flat for the past long term. And I don't even -- I don't know if I want to look at UAMY now. But on our end here, when we really dig deep into what's actually going on, we see the uniqueness of UAMY and the prospects and the possibilities of this going really, really good in the long term. Is there anything on your end there that you're possibly working with to get your yourselves out of the shadows into so that MarketWatch and other valuable resources that investors read will start noticing UAMY.

Well, we're certainly cognizant of the fact that we're not being looked at really by most institutions. Part of the problem is having a sub $1 share price. The 10-K late filings of black eye and we're fixing all that. So we recognize that this company has a lot more opportunity than the market is giving a credit for. And it's our jobs to begin trying to fix that. And that's a matter of IR and PR work and we'll be probably making some recommendations to our Board in that area over the next weeks and months. So we're trying to get all our ducks in a row by getting our K, our Qs up to date, get our numbers out. And obviously, any kind of award from any government agency would be significant and would be a newsworthy event and we're in a perfect catbird seat to do that. And so it's incumbent upon us to be sure that the right agencies know what we do and what we have available and how we can deliver.

The next question is coming from [ Demetrius Matthew ]. Demetrius is a private investor.

Regarding Wadley, it was almost a year ago that -- can you hear me?

Yes, we can hear you.

It was almost a year ago that the company had an agreement with the Wadley mine, which -- and it's had a long history with Wadley, some of it, okay, and some rougher times. The agreement was to basically use 8 months to survey the mine, sort of find out what kind of grades of ore we could get, pay them $10,000 a month, I believe, and then try to purchase that mine in April of this year, 8 months later. I know that's been extended out via the 10-K. What have we learned from the surveying of Wadley and the material that the company has bought from Wadley thus far?