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

Thanks, and I appreciate everyone joining us for this operational and financial call covering the company's third quarter along with the 9 months that ended on 9/30. Several other members of management are here with me today, and they'll be taking part. Joe Bardswich serves as a Director and shares the Co-CEO role with me; Rick Isaak is our Senior Vice President and Chief Financial Officer; and Jonathan Miller holds the titles of Vice President of Investor Relations and Global Sales Manager. My thinking is that we'll kick things off by having Rick walk through the financials that appeared in this morning's press release; and I believe the Form 10-Q has just been filed as well, so that will provide far more detailed information. Rick, would you like to begin?

Absolutely. Thanks, Gary. I'll walk through our consolidated results, then touch on some metrics for each of our businesses, and after that, a few key areas related to our balance sheet and cash flow. So let me begin with the consolidated results from our continuing operations. For the first 9 months of this year, sales came in at $8.1 million, which represents a 23% increase over last year. That rise was mainly driven by greater antimony sales volume on stronger demand, and to a smaller degree by higher zeolite sales volume along with a higher sales price. The zeolite price increase from last year took effect in stages as 2023 drew to a close. Gross profit reached $2.2 million during the first 9 months of this year, up 107% from last year. That gain largely came from better efficiencies tied to the higher volume, though it was partly offset by increased maintenance and other related costs in our zeolite business, which I'll cover in more detail later. Operating expenses totaled $3.3 million for the first 9 months of 2024, which is $1.8 million more than in 2023; this rise was mainly tied to roughly $454,000 in noncash stock compensation expense, $446,000 in project costs, $482,000 in salary and board fee expenses, and $90,000 in SEC and annual meeting costs that were incurred earlier this year, but not until the fourth quarter of last year. The $446,000 in project expenses relates to the improvement initiatives we've been talking about all year, including buying mining claims in Alaska and Canada, the SEC technical report for BRZ, possible acquisitions, and government sales and funding efforts. Now let's go over a few metrics for each of our businesses. Starting with our antimony business. Sales from our antimony business during the first 9 months of this year rose by 24% versus the prior year, and gross profit was more than double last year's gross profit. The gross profit and gross margins we're seeing this year are higher than last year thanks to efficiencies from the higher sales volume and a terrific, experienced team operating our facility in Montana, who have kept efficiently producing high-quality products year after year. Our average antimony sales price per pound for the first 9 months of this year was $4.73, which is low relative to the market price, mainly because of 2 factors. First, almost 1/3 of our sales this year involve processing customer-owned ore into antimony metal, a process known as tolling; this brought down our average sales price per pound, but still delivered a nice return, as our results show. If you take out tolling sales, our sales price per pound rose in line with the market price increase, similar to prior years. Also, our antimony supplier had a planned shutdown lasting 2 months, from mid-May to mid-July of 2024, which reduced our antimony sales in the third quarter of 2024 and brought down our average sales price per pound because tolling sales made up a higher concentration. At the start of Q4, we're starting to notice a bit of an uptick. Moving on to zeolites. For the first 9 months of this year, revenue from our zeolite business rose 17% versus the prior year. Gross profit fell by $255,000 year over year, and our operating loss worsened by $562,000. Throughout Q3 of 2024, we kept working to strengthen how our zeolite business runs; that meant upgrading production processes, safety, and equipment at the site, which has produced greater product throughput, better timing on customer deliveries, a safer workplace, and improved production reliability and run time. A high-caliber team at our zeolite facility deserves credit for these gains. That said, this progress carried a price, visible in the zeolite segment's results through higher maintenance and other related costs and larger operational losses; going forward, these operational improvements and their associated costs ought to start tapering off in coming quarters. Also in Q3, we significantly boosted the material we're supplying from our zeolite mine so we can keep delivering product to customers on time. And we recorded somewhat higher sales volume in the animal feed sector. On the whole, these upgrades at our Bear River Zeolite facility position us to expand our zeolite business, something that didn't occur in earlier years. Now to our Mexico subsidiary. As we've mentioned on earlier calls, we shut down and ceased operations in Mexico on March 11, 2024. Over the first 9 months of this year, we sold off a portion of the antimony inventory in Mexico, bringing in $1.2 million of revenue; yet despite those stronger sales and the closure, our discontinued Mexico operations still produced a loss of $195,000 across the first 9 months of this year. All right. Now let's walk through a few balance sheet and cash flow items. We either stabilized or improved our working capital levels on a comparative basis, including inventory, receivables, and payables. Our antimony supplier went through a planned shutdown, as I noted earlier. Consequently, vendor payables rose as shipments from them picked up later in Q3. As of September 30, 2024, our cash and cash equivalents stood at $12.97 million, up $1.1 million from December 31, 2023. All in all, Q3 was a productive quarter for us. We acquired mineral claims in Canada and Alaska, kept advancing our SEC technical report summary covering our zeolite reserves in Idaho, sold our residential home in Idaho, kept holding meetings with government officials and various departments of the U.S. government about sales and funding of antimony zeolite and other minerals, reached out to numerous international suppliers of antimony ore to buy ore and are beginning to see some samples, and signed a lease for the operation and use of a metals concentration facility in Philipsburg, Montana. Through these and other initiatives, we'll keep bettering our great company as part of our mission to increase shareholder value. I'll hand it back to you, Gary.

Appreciate that, Rick. Now let's spend a moment on BRZ, our zeolite mining business. The new management group there has performed exceptionally well — that includes the VP and General Manager, the plant superintendent, and the office manager — and you can see the proof in the outstanding uptime we've recorded across the last 2 quarters, running between 93% and 96%. Earlier this year we also did something this company had never done before: we drilled 82 test holes to confirm we had adequate reserves — reserve reports are being prepared — and the price tag for that came to roughly $150,000, an expense that showed up in the year-to-date 9/30 figures. That's something the company had never done and something that was badly needed. Another key point: when we put in those drill holes, we simultaneously blasted enough material to carry us 2 years at the rates we currently produce. So bringing in blasting crews for our testing turned out to be a win-win. It also matters that we're still spending CapEx at BRZ in 2024 — CapEx that ought to have been spent 2, 3, 4 years back. We expensed just about $62,000. We purchased a front-end loader for $403,000, which gets capitalized. But when you look at the cash balance, keep in mind we're laying out substantial money that was never spent previously. The production line needed repairs, and for the most part those are done now. Regarding the challenges involving MSHA and the other government bodies that oversee us, my understanding is that we took on costs related to that previously, and they also affected our income statement during this year, but we've moved past those issues. So right now, what BRZ's business is doing is growing sales. Every sale we had fallen behind on has been made up — ordinarily those ran 30, 45 days late. At present we're at point of sale. Delivery is something we can do. There's plenty of inventory in our warehouse, and we're actively going after new business. During the month just past, October, we made shipments to a handful of new animal customers. And my expectation is that you'll continue to see some increases in sales. During the entirety of 2024, we pursued a possible purchase that, in the end, we decided not to go through with, since we concluded that the reserves held by that rival of ours did not warrant completing such a transaction. There's a separate deal currently in progress, and our hope is to make it public and possibly finalize it before the year is over. That said, the real goal here at BRZ is growing our sales. We're pursuing that not only via our own committed staff — we're presently bringing on around 1 or 2 additional salespeople — but we're also entering fresh markets, places we've never operated in previously, and we've been putting in serious effort to win over the U.S. We've been telling the government they ought to build up zeolite reserves in case of a nuclear incident; on top of that, we're talking with them about water treatment plants across the nation. So at this stage, given that our process has been fixed and is running without a hitch, much like a finely tuned machine, we can now expand sales, and I think that's what the coming quarters will show. Now let's turn to antimony, which is — in today's press release, I tried to give everyone a clearer picture of what's going on in the worldwide market. And honestly, it's quite revealing, I think, for both our management team and our Board to comprehend what has really happened, and it has been striking. A piece came out earlier today, and I'd like to share a few paragraphs from it. According to that article, China's control over minerals is becoming more restrictive. The already powerful position China holds when it comes to extracting and processing raw minerals — key building blocks for the most sophisticated technologies we have now — is only going to become more dominant. Over the past several weeks, Beijing has rolled out a set of measures that have made it far harder for companies based abroad, semiconductor makers in particular, to purchase the numerous rare earth minerals along with other minerals that are largely mined and refined inside China. At this point, China supplies virtually all of these materials globally. Those fresh curbs lock in that dominance in the market. Effective October 1, anyone exporting these materials must provide regulators with an in-depth, step-by-step account of where rare earth mineral shipments end up and how they're used across western supply chains. That requirement has handed Beijing more leverage to decide which foreign firms receive limited quantities. This dynamic is showing up very clearly. As I mentioned in this morning's release, our effort to secure fresh antimony supply has involved conversations with at least 54 separate parties across 16 nations — that's 54 parties in 16 countries, to put it another way. Nobody on our team had ever tackled anything like this, and it's proven difficult, but in my view we've made substantial progress. We've gotten it down to about four or five possible suppliers. Samples from those antimony sources are being obtained. Those samples are undergoing analysis on our end. One key thing to grasp is that the rock's meteological composition varies depending on which part of the world it comes from. There's a concern about how much gold, or how much of other contaminants, might be present in the antimony, and how that impacts our systems, our furnaces, and everything else. So this is a process we have to work through, and right now we've reached the stage of negotiating contracts so we can begin receiving material. As you're aware, at Thompson Falls we're only operating at half of our capacity. We were able to utilize the material as of yesterday. We're working intensely to secure it, but we have to proceed properly. The marketplace has been flooded with intermediaries and con artists. Naturally, when an item's value triples, every kind of disreputable operator emerges — con men from all over come out of the woodwork. That's the reason we've had to be extraordinarily careful about our counterparties, run our own due diligence, and verify that the goods genuinely land on U.S. territory. My hope is that by the end of the year, you'll see material < > that we can either process ourselves or that might be shipped to Mexico; that call hasn't been finalized as of yet. So while we were looking outward for antimony sources, it became quite clear to us that we possessed our own supply. What I mean is, our company has the know-how, and we bring plenty of mining background — 40, 50 years' worth — plus they have extensive connections. So we've been racing at top speed to locate quality antimony deposits capable of being mined quickly. We aren't doing greenfield exploration. We're returning to places where antimony was previously discovered and previously extracted. And there's a huge distinction between mining at $17 as opposed to $5 when you're selling the product. So we've verified that these properties sit near roads, railroads, and riverways — any route that lets us move that material to Montana; we operate a flotation facility in Philipsburg. We also have a smelter in Thompson Falls, and we're in need of business. Given all that, we're confident we're in solid areas. Competition is heavy. Luckily, we've been fortunate enough to secure some excellent leases. And it isn't just antimony — other critical minerals are in the mix too. The government's list contains 17 or so of them. I believe we're currently engaged with 7. So I'll hand things over to Joe in a moment to discuss these mining-side activities; and our hope is that we'll genuinely be producing material during 2025, which is quite a rapid pace for companies that are only now acquiring leases. Naturally, weather is a concern, and permits must be obtained, but we're pushing this forward on an extremely fast schedule. And once Joe walks through our Canadian and Alaskan operations, I'll dive deeper into certain private and government conversations we're engaged in, so you'll get a clearer sense of where this company is headed. Joe?

Thanks. To sum up where we stand on buying properties, our goals are these. We're steering clear of federal acreage and the permitting hoops under NEPA, the National Environmental Policy Act, that have tripped up others such as Perpetua and so on. What's left is going onto private property and state property; we've steered clear of jurisdictions that oppose mining and populations that oppose mining, and we've steered clear of threatened species, habitats, wilderness areas and that sort of thing. What we favor is easy access to prospective mines, a broad preference for mining at the surface rather than underground, plus haulage access to Thompson Falls and Philipsburg, and even Madero down in Mexico. Antimony and other critical minerals tend to be critical because supply is tight, and that means a major ore body discovery probably won't come along. One possible exception would be as a byproduct of a common mineral inside a large deposit, yet that isn't a near-term answer, since bringing it to market takes a very long time. There's no time on our side to permit and build a complicated metallurgical plant; thus we're targeting high-grade deposits, with upgrading limited to crushing and gravity separation as needed. That means no chemicals, no grinding — grinding would carry a big CapEx along with permitting and costs for tailings disposal, and so forth. We also want to be near existing infrastructure, where hauling ore by truck would pencil out; we're talking cobalt at $11, nickel at $7, copper at $4, and then antimony at $17, which offers a genuine edge. Antimony carries another plus: an antimony concentrate may reach 70% antimony, whereas copper sits in the 24% range. So trucking over a longer distance works, compared with the others. As for recent activity, the Maclaren River area in Alaska has very high-grade copper in a setting we think might favor additional minerals. Some exploration is needed there. Access is decent off the Denali Highway. We're in a permafrost zone, so building road on top of permafrost is quite easy and does no environmental damage. The Stibnite Creek deposit in Alaska, farther east, has high-grade antimony, a short distance from Highway 1. Highway 1 meets the Alaska Highway roughly 20 miles east. That short stretch to Highway 1 is hard to rain on, but roads existed before. We'll do some work to determine the best options there. We were just recently told by the Doyon Corporation, a native corporation along our boundary, that they've done work and stibnite shows up across that boundary. So we'll coordinate with them and see whether a win-win situation can be reached for both sides. The Fairbanks area of Alaska holds many antimony showings. It was essentially the main antimony source for the allied forces during World War I. That antimony is tied to gold production and to gold exploration. There's a great deal of data out there, and pulling it all together is somewhat challenging since the main emphasis had been on that gold exploration. This is a mining district. Infrastructure is solid, with good highways. The Alaska Highway and Dalton Highway both end here, and right now we're in talks with multiple landowners in that nearby vicinity. Typically in Alaska, we've tried to get the message across to prospectors, exploration companies, and geologists that our target is antimony along with other critical minerals; our preference is to purchase from you. Should you be able to provide supply, we could enter a joint venture with you, or arrange a lease option, buy your property — whichever option you favor. We occupy that position of owning the downstream facilities. That knowledge is ours, and few others are able to make that claim. Regarding other minerals such as cobalt, nickel, copper, and tungsten, we've obtained claims, some held outright under our own name and others through a lease option arrangement with a prospector who's been in the area a long time. This sits close to Sudbury, Ontario. High grades across narrow widths, and historic drill holes reach as far back as 16% cobalt, 8% nickel, or extremely high grade across a reported 4 feet. There's genuine potential for a sizable deposit within this geological setting, and we'll continue the work done so far. Up to now, results have been favorable, indicating disseminated cobalt mineralization in neighboring areas. Another plus for this location: there are 2 very large mining companies — Vale, the Brazilian company, and Glencore, the Swiss company. Their excess milling, smelting, and refining capacity is all situated within 30 miles of the Cartier property. So should we succeed in proving up a cobalt deposit here, no CapEx or permitting delays would arise for mineral processing plants. I'd also like to bring up the other major asset, which is people. We've already covered how well Jeff has performed at Bear River. Within the industry, Jeff is regarded as Mr. Antimony, with a specialty in pyrometallurgy. Aaron, who joined relatively recently, focuses on hydrometallurgy. We've also brought on 2 consulting geologists, Rod Blakestad, who graduated from University of Alaska. He's spent 20 years working in the field in Alaska. He's the person who discovered the 10 million ounce gold deposit, the Fort Knox deposit. It appears he's acquainted with virtually everyone in the state connected to mining or geology. In the Cartier Sudbury area, though, there's Dr. Fred Brakes, whose lifetime was spent with the Ontario geological survey. His specialty was the Sudbury area and the Veronian metaediments. That high-grade cobalt originates from those Veronian metaediments. So we believe our position is strong when it comes to the people on our team. And I'll hand it back to you, Gary.

Appreciate that, Joe. Nobody listening should be caught off guard. It's quite probable you'll hear about further claims being announced. There's no intention on our part to ease up. In our view, this represents a tremendously worthwhile long-term enhancement for the business, and given that we hold the midstream and downstream assets, we're the obvious party to carry it out. Words can't really capture how valuable those assets are. Through them, we gain enormous leverage in negotiations with other firms, and replicating what this business already possesses would require years of effort to construct. The moment has arrived for us to make the most of it. That puts us in a really lucky spot; so let's spend a moment discussing the situation on the private-company side — the businesses that have reached out to us — and afterward I'll turn to the government angle once I've had Jonathan walk you through a brief overview of our IR; everyone needs to grasp that, as I see it, antimony is more essential to private industry than to the government. A bunch of businesses have come to us that currently obtain antimony products — finished goods — from abroad; and an executive order set for 2027 requires them to source from U.S. suppliers if they intend to sell to the armed forces or military. Consequently, we now have several — a couple of companies we're in talks with that want 100% of our supply. They require finished products in a way that secures them a domestic source for critical minerals by 2027, which is a mere 2 years away. So these conversations are happening alongside our government discussions; thus it isn't only the government chasing our finished products, it's private industry too, and these are major corporations holding major military contracts; so I wanted Jonathan to chime in. Jonathan is among the new VPs who arrived around the same time as Aaron Tenesch, our VP of Antimony. As lots of you are aware, we've done a fair amount of marketing, attempting to communicate our story to the Street. That's something this company has essentially never done before. We're hoping to see some equity research coverage prior to the year's end, which this company has never enjoyed; and we've truly labored to get introductions to bankers, research analysts, institutional investors, spreading the word. So Jonathan, I don't want to take your spotlight. How about you share with everyone what we've accomplished and what's in store for the remainder of the year?

Thanks, Gary. Good afternoon, all. I'm happy to share where we stand on the Investor Relations side after Q3. Our work has focused on building stronger ties with the investment community, being more transparent, and positioning the company strategically so its story reaches the wider market. Let me start with the institutional meetings and site visits we held. During this quarter, we put direct dialogue with key institutional investors first, to reinforce our strategic vision and the operational progress we've made. Those conversations gave investors a deeper look at our recent initiatives, and we got useful feedback in return. On top of that, site visits have let research analysts see our operations for themselves, which builds trust and understanding around the concrete work behind our growth. On the publications and media side, we concentrated on making sure the company's activities and milestones get seen by a larger audience. We landed placements in industry-specific and broader financial outlets such as S&P Global, Yahoo Finance, mining.com and miningtechnology.com, among others, which has both raised awareness and helped build a better-informed investor base. We've also seen a notable increase in engagement and reach across our social media profiles on LinkedIn and X. If you aren't following us there yet, please go ahead and do so; this push to raise our public profile has strengthened our ability to reach and draw in new investors who share our long-term goals — above all, securing domestic critical mineral pipelines for strategic minerals such as antimony, which go into aerospace, military and defense. Now, on our conference participation in Q3 and what's ahead in Q4: we attended 3 virtual and 2 in-person conferences, and we have more key conferences lined up in the coming months. Those are NobleCon on December 2 and 3 in Boca Raton, Florida; an investor roadshow with Seventh Circle Consulting on December 5 in Miami Beach, Florida; and the Benchmark Company's 13th Annual Discovery One-on-One Conference on December 11 in New York City. These events have given us a great platform to get our message across and talk through our unique value proposition with a broad range of investors. Notably, our involvement in these conferences has produced follow-up discussions with dozens of investors who want to deepen their involvement with us, which we see as a positive for our future growth. On the Bear River Zeolite side of the business, we're actively taking part in research studies with a leading university that has received part of a $26 million grant to investigate alternatives such as zeolite to replace fly ash and concrete manufacturing, aiming to reduce CO2 emissions. We're also in discussions with that same university about EPA grants to evaluate zeolite as a cattle feed amendment to reduce methane gas emissions in agriculture. With solid academic research behind us, we're confident in our ability to penetrate multiple markets that stand to benefit significantly from zeolite. With a robust inventory, we're actively seeking new business across various sectors. On the whole, our dedication is to keep this momentum going, building solid ties with investors and ensuring those who hold shares stay updated and involved while we carry on delivering on our objectives. Thanks.

Thanks, Jonathan. Okay, let's talk about government grants. I think that's the thing a lot of people are wondering about — where does U.S. Antimony stand on that front. So last week, over 2 days in a row, we had 5 member crews from the U.S. government visiting us, drawn from 3 different divisions of the Department of Defense; they came out to see our 2 facilities, one in Philipsburg and the other in Thompson Falls, Montana. How this came together: back in mid-October we sent in a concept paper to the Department of Defense, asking for funding across a number of different areas for U.S. Antimony. Melissa Pagen, who serves as our Senior Vice President, Corporate Development and Government Relations, is going to be with me in Washington, D.C. this week. Once this call with investors wraps up, I'm heading out tonight. We're getting together with the folks at our lobbying firm, and we're trying to get 2 white papers finished — the Department of Defense asked for them regarding a number of projects that came up when we were in Montana last week. Let me be clear: nothing is set in stone at this point. Those white papers still need to be turned in, approvals still need to come through, and money still has to be freed up from different sources. That said, antimony is clearly generating a lot of buzz right now, especially after China said in mid-September that it would scale back shipments of antimony worldwide in service of its own national interest. So now it falls to the U.S. government to figure out an answer. We think we're the obvious pick to assist with fixing the antimony shortfall, particularly when it comes to finished goods. Once we begin — once I kick off the investor calls in a few minutes, I don't want anyone posing questions to me regarding the U.S. government that I haven't already addressed. Everything I intend to say has already been stated. And as you can probably guess, I'm limited in what else I can share; so please be understanding about this and refrain from asking things I'm unable to answer. If not, we're simply squandering one another's time. We're aware that this commodity is genuinely needed by the government; we're aware that we possess the capability to fulfill that need. In the 10-Q we filed today, you'll notice we also put an ATM registration in place — that's an at-the-market issuance arranged with Alliance Global — for as much as $25 million. Let me be clear: right now, we don't intend to tap it anytime soon. Still, it's a tool we might need later on, should we ever be obligated to match government funding on some kind of pro rata basis. Having it means we can access the capital markets whenever that becomes necessary. Given the amount of cash we currently hold and the fact that our balance grows each quarter, raising capital makes no sense unless a particular need arises—and right now, no such need exists. We feel hopeful that the white papers we'll be filing before long may allow the government to cover 100% of funding, although certainty isn't possible. Funding has been going to other companies. Some of these are based in Canada, some in the U.S., and antimony is their focus; we understand that still more are lined up waiting. Therefore, the meetings we held during the past week proved very educational for our governmental officials, and professionally for us in terms of grasping what their requirements are. And at this point we possess a game plan, and that is what we are focused on; so this company does not need government funding in order to be successful; nevertheless, to launch us to the level we aim for, we do need it. And it might make something occur dramatically fast. And so that is always a pleasant advantage when it is a win-win scenario in which we can assist them and they can assist us and every one of us can assist our country. With that said, I'd now like to open the floor and invite anyone on the call to raise whatever questions they may have about the numbers we posted for the third quarter and the nine months that closed on September 30. I'll take those quickly, and then I'll let — I might let Joe come in as well. That was the first thing that crossed my mind back when the price shot up to $17 a pound: wow, there's a mine sitting right in our own backyard. So we dug out the old documents and started digging through them, and it looks like the previous management team had disposed of most of the surface rights, though we did keep a decent chunk of the mining rights. However, when you look at how that mine has performed over time, reopening it didn't seem like a good prospect. Joe, is there anything you'd like to say to build on that?