-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Rsra/uVZmkxQ7XNdvlpKM85143Xqm2d/PvXHU3+BzRxOst16JTP4H54u3wy1A6yR wbfwXqLmc0QGQrxRm87gbQ== 0000893877-97-000640.txt : 19971111 0000893877-97-000640.hdr.sgml : 19971111 ACCESSION NUMBER: 0000893877-97-000640 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971110 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: MINERA ANDES INC /WA CENTRAL INDEX KEY: 0001030219 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS METAL ORES [1090] FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-22731 FILM NUMBER: 97712022 BUSINESS ADDRESS: STREET 1: 3303 N SULLIVAN RD CITY: SPOKANE STATE: WA ZIP: 99216 BUSINESS PHONE: 5099217322 MAIL ADDRESS: STREET 1: 3303 NORTH SULLIVAN RD CITY: SPOKANE STATE: WA ZIP: 99216 10QSB 1 QUARTERLY REPORT ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1997 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to __________ Commission file Number 000-22731 MINERA ANDES INC. (Exact name of small business issuer as specified in its charter) ALBERTA, CANADA (State or other jurisdiction of incorporation or organization) NONE (I.R.S. Employer Identification No.) 3303 N. SULLIVAN ROAD, SPOKANE, WA 99216 (Address of principal executive offices) (509) 921-7322 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ ] No [X] Shares outstanding as of October 31, 1997: 19,216,050 shares of common stock, with no par value Transitional Small Business Disclosure Format (Check One): Yes [ ] No [X] ================================================================================ TABLE OF CONTENTS PART I - FINANCIAL INFORMATION Item 1 Consolidated Financial Statements............................3 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations................9 PART II - OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K............................11 SIGNATURES....................................................................12 2
MINERA ANDES INC. "An Exploration Stage Corporation" CONSOLIDATED BALANCE SHEETS (U.S. Dollars-Unaudited) September 30, December 31, 1997 1996 --------------------- --------------------- ASSETS Current: Cash $ 5,285,317 $ 6,660,633 Receivables 124,180 167,110 --------------------- --------------------- 5,409,497 6,827,743 Mineral properties and deferred exploration costs 5,250,711 3,440,879 Capital assets 246,129 48,575 --------------------- --------------------- $ 10,906,337 $ 10,317,197 ===================== ===================== ===================== LIABILITIES ===================== Current: Accounts payable and accruals $ 109,527 $ 227,829 109,527 227,829 --------------------- --------------------- SHAREHOLDERS' EQUITY Share capital 15,132,262 13,365,014 Accumulated deficit (4,335,452) (3,275,646) --------------------- --------------------- 10,796,810 10,089,368 --------------------- --------------------- $ 10,906,337 $ 10,317,197 ===================== ===================== The accompanying notes are an integral part of these consolidated financial statements.
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MINERA ANDES INC. "An Exploration Stage Corporation" CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT (U.S. Dollars-Unaudited) Period from Three Months Three Months Nine Months Nine Months July 1, 1994 Ended Ended Ended Ended (commencement) September 30, September 30, September 30, September 30, through 1997 1996 1997 1996 September 30, 1997 ------------- ------------- ------------- ------------- ------------------ Administration fees $ 9,111 $ 6,304 $ 25,531 $ 17,942 $ 112,412 Audit & accounting 13,541 6,006 42,423 30,522 89,803 Consulting fees 33,439 43,016 121,843 95,075 394,663 Depreciation 1,013 0 1,648 0 1,648 Equipment rental 2,427 0 2,427 942 5,354 Foreign exchange (gain) loss 37,300 6,397 127,338 (23,809) 75,787 Insurance 639 0 639 0 639 Legal 16,553 10,014 114,224 40,453 223,810 Materials & supplies 5,000 0 5,012 13,052 40,199 Office overhead 81,543 61,232 405,923 192,182 683,989 Telephone 11,523 14,902 43,812 36,874 171,449 Transfer agent 2,466 3,493 6,206 7,201 37,166 Travel 16,406 6,863 41,026 32,400 138,563 Wages & benefits 53,519 41,685 163,603 122,656 450,070 Write-off of deferred expenditures 0 0 0 0 1,528,647 ------------- ------------- ------------- ------------- ------------- Total expenses 284,480 199,912 1,101,655 565,490 3,954,199 Interest income (41,648) 0 (128,983) 0 (202,787) Loss for the period 242,832 199,912 972,672 565,490 3,751,412 Accumulated deficit, beginning of the period 4,088,497 2,250,935 3,275,646 1,798,026 0 Share issue costs 4,123 82,760 87,134 170,091 566,825 Deficiency on acquisition of subsidiary 0 0 0 0 17,215 ------------- ------------- ------------- ------------- ------------- Accumulated deficit, end of the period $ 4,335,452 $ 2,533,607 $ 4,335,452 $ 2,533,607 $ 4,335,452 ============= ============= ============= ============= ============= Loss per common share $ 0.01 $ 0.01 $ 0 .06 $ 0.05 $ 0.35 ============= ============= ============= ============= ============= Weighted average shares outstanding 19,200,012 13,866,705 17,222,432 12,150,432 10,848,605 ============= ============= ============= ============= ============== The accompanying notes are an integral part of these consolidated financial statements.
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MINERA ANDES INC. "An Exploration Stage Corporation" CONSOLIDATED STATEMENTS OF MINERAL PROPERTIES AND DEFERRED EXPLORATION COSTS (U.S. Dollars-Unaudited) Period from Three Months Three Months Nine Months Nine Months July 1, 1994 Ended Ended Ended Ended (commencement) September 30, September 30, September 30, September 30, through 1997 1996 1997 1996 September 30, 1997 ------------- ------------- ------------- ------------- ------------------ Administration fees $ 5,080 $ 7,181 $ 19,821 $ 24,411 $ 276,697 Assays & analytical 35,169 24,668 172,970 70,132 509,348 Construction & trenching 0 75,334 27,987 253,332 436,962 Consulting fees 23,295 15,194 71,666 40,427 542,473 Depreciation 12,335 6,336 22,050 8,448 36,834 Drilling 0 96,170 54,805 96,720 280,050 Equipment rental 0 13,902 38,959 45,862 207,634 Geology 137,112 153,773 594,898 407,652 1,757,033 Geophysics 54,658 45,201 54,658 78,599 131,460 Insurance 12,826 15,376 28,515 30,564 102,754 Legal 38,179 15,075 76,966 40,510 345,599 Maintenance 11,701 23,084 26,763 35,622 86,812 Materials & supplies 18,349 17,624 51,647 49,753 293,715 Project overhead 11,745 13,436 31,922 23,903 194,035 Property & mineral rights 120,294 40,242 296,958 79,046 863,374 Telephone 1,468 1,814 4,508 3,442 29,465 Travel 46,213 24,755 143,443 68,371 413,728 Wages & benefits 32,816 32,597 91,296 98,278 395,246 ------------- ------------- ------------- ------------- ------------- Costs incurred during the period 561,240 621,762 1,809,832 1,455,072 6,903,219 Deferred costs, beginning of period 4,689,471 2,718,280 3,440,879 2,534,970 0 Deferred costs acquired 0 0 0 0 576,139 Deferred costs written off 0 0 0 0 (1,528,647) Mineral property option proceeds 0 0 0 (650,000) (700,000) ------------- ------------- ------------- ------------- ------------- Deferred costs, end of the period $ 5,250,711 $ 3,340,042 $ 5,250,711 $ 3,340,042 $ 5,250,711 ============= ============= ============= ============= ============= The accompanying notes are an integral part of these consolidated financial statements.
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MINERA ANDES INC. "An Exploration Stage Corporation" CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (U.S. Dollars-Unaudited) Period from Three Months Three Months Nine Months Nine Months July 1, 1994 Ended Ended Ended Ended (commencement) September 30, September 30, September 30, September 30, through 1997 1996 1997 1996 September 30, 1997 ------------- ------------- ------------- ------------- ------------------ Operating Activities Loss for the period $ (242,832) $ (199,912) $ (972,672) $ (565,490) $ (3,751,412) Non-cash items: Write-off of incorporation costs 0 0 0 0 665 Write-off of deferred expenditures 0 0 0 0 1,528,647 Depreciation 1,013 0 1,648 0 1,648 ------------- ------------- ------------- ------------- ------------- (241,819) (199,912) (971,024) (565,490) (2,220,452) Net changes in non-cash working capital items (258,907) 83,547 (75,373) 100,146 (14,652) ------------- ------------- ------------- ------------- ------------- Cash used in operating activities (500,726) (116,365) (1,046,397) (465,344) (2,235,104) ------------- ------------- ------------- ------------- ------------- Financing Activities Shares issued for cash 78,146 1,194,899 1,767,248 4,903,730 9,683,387 Share subscription received 0 0 0 0 4,873,336 Shares issued for subsidiaries 0 0 0 0 575,537 Advances from related parties 0 (1,174,150) 0 (1,278,181) 0 Share issue costs (4,123) (82,760) (87,134) (170,091) (566,825) ------------- ------------- ------------- ------------- ------------- Cash (used in) provided by financing activities 74,023 (62,011) 1,680,114 3,455,458 14,565,435 ------------- ------------- ------------- ------------- ------------- Investing Activities Incorporation costs 0 0 0 0 (665) Purchases of capital assets (202,448) 6,336 (199,201) (54,911) (247,776) Mineral properties and deferred exploration costs (561,240) (621,762) (1,809,832) (1,455,072) (6,903,219) Acquisition of subsidiaries 0 0 0 0 (593,354) Mineral property option proceeds 0 0 0 650,000 700,000 ------------- ------------- ------------- ------------- ------------- Cash used in investing activities (763,688) (615,426) (2,009,033) (859,983) (7,045,014) ------------- ------------- ------------- ------------- ------------- Increase (decrease) in cash (1,190,391) (793,802) (1,375,316) 2,130,131 5,285,317 Cash, beginning of the period 6,475,708 3,451,953 6,660,633 528,020 0 ------------- ------------- ------------- ------------- ------------- Cash, end of the period $ 5,285,317 $ 2,658,151 $ 5,285,317 $ 2,658,151 $ 5,285,317 ============= ============= ============= ============= ============= The accompanying notes are an integral part of these consolidated financial statements.
6 MINERA ANDES INC. "An Exploration Stage Corporation" NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (U.S. Dollars-Unaudited) 1. ACCOUNTING POLICIES The accompanying consolidated financial statements of Minera Andes Inc. (the "Corporation") for the three month and nine month periods ended September 30, 1997 and 1996 and for the period from commencement (July 1, 1994) through September 30, 1997 have been prepared in accordance with accounting principles generally accepted in Canada which differ in certain respects from principles and practices generally accepted in the United States, as described in Note 3. Also, they are unaudited but, in the opinion of management, include all adjustments, consisting only of normal recurring items, necessary for a fair presentation. Interim results are not necessarily indicative of results which may be achieved in the future. The December 31, 1996 financial information has been derived from the Corporation's audited consolidated financial statements. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended December 31, 1996. The accounting policies set forth in the audited annual consolidated financial statements are the same as the accounting policies utilized in the preparation of these consolidated financial statements, except as modified for appropriate interim presentation. 2. MINERAL PROPERTIES Santa Clara Project The Santa Clara property was subject to a joint venture with Cominco Ltd. ("Cominco"), under the terms of a Memorandum of Understanding signed between the Corporation and Cominco in March, 1996. During July, 1997, Cominco advised the Corporation that it would be terminating the Memorandum of Understanding with respect to Santa Clara, and this was effected during the third quarter of 1997 (after the required 60 days notice). This also terminated the relationship between the Corporation and Cominco. 3. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED ACCOUNTING PRINCIPLES Differences between Canadian and U.S. generally accepted accounting principles as they pertain to the Corporation relate to accounting for share issue costs, loss per share, non-cash issuance of common shares and the acquisition of Scotia Prime Minerals, Incorporated ("Scotia"), and are described in Note 13 to the Corporation's consolidated financial statements for the year ended December 31, 1996. The impact of the above on the interim consolidated financial statements is as follows: 7 MINERA ANDES INC. "An Exploration Stage Corporation" NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.) (U.S. Dollars-Unaudited)
Three Months Ended Nine Months Ended ---------------------------------- ---------------------------------- Sept. 30, 1997 Sept. 30, 1996 Sept. 30, 1997 Sept. 30, 1996 -------------- -------------- -------------- -------------- Accumulated deficit, end of period, per Canadian GAAP $ 4,335,452 $ 2,533,607 $ 4,335,452 $ 2,533,607 Adjustment for acquisition of Scotia 248,590 248,590 248,590 248,590 Adjustment for share issue costs (566,825) (420,838) (566,825) (420,838) -------------- -------------- -------------- -------------- Accumulated deficit, end of period, per U.S. GAAP $ 4,017,217 $ 2,361,359 $ 4,017,217 $ 2,361,359 ============== ============== ============== ============== September 30, December 31, 1997 1996 -------------- -------------- Share capital, per Canadian GAAP $ 15,132,262 $ 13,365,014 Adjustment for acquisition of Scotia 248,590 248,590 Adjustment for share issue costs (566,825) (479,691) -------------- -------------- Share capital, per U.S. GAAP $ 14,814,027 $ 13,133,913 ============== ============== Period from July 1, 1994 (commencement) through Sept. 30, 1997 -------------- Loss for the period, per Canadian GAAP $ 3,751,412 Adjustment for acquisition of Scotia 248,590 -------------- Loss for the period, per U.S. GAAP $ 4,000,002 ============== Loss per common share, per U.S. GAAP $ 0.37 ==============
8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Note Regarding Forward-Looking Statements - ----------------------------------------- The information in this report includes "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and is subject to the safe harbor created by those sections. Factors that could cause results to differ materially from those projected include, but are not limited to, results of current exploration activities, the market price of precious and base metals, the availability of joint venture partners or sources of financing, and other risk factors detailed in the Corporation's Securities and Exchange Commission filings. Overview - -------- The principal business of the Corporation is the exploration and development of mineral properties, consisting of mineral rights and applications for mineral rights, covering approximately 210,000 hectares in six provinces in the Republic of Argentina. The lands are comprised of option-to-purchase contracts, exploration and mining agreements and direct interests through the Corporation's filings for exploration concessions. The Corporation carries out its business by acquiring, exploring and evaluating mineral properties through its ongoing exploration program. Following exploration, the Corporation either seeks to enter joint ventures to further develop these properties or disposes of them if the properties do not meet the Corporation's requirements. The Corporation's properties are all early stage exploration properties and no proven or probable reserves have been identified. Plan of Operations - ------------------ The Corporation has budgeted and plans to spend approximately $2.7 million over the next 12 months for mineral property and exploration activities on its properties in Argentina. Most of these funds will be expended through the end of the 1997/1998 field season, which the Corporation expects will end in May 1998. The Corporation believes that its existing funds and projected sources of funds will be sufficient to finance this planned exploration and the related ongoing activities for this future period. If the Corporation were to determine to develop a property or group of properties beyond the stage of exploration, substantial additional financing would be necessary. Such financing would likely be in the form of equity, debt or a combination of equity and debt. The Corporation has no current plans to seek such financing and there is no assurance that such financing, if necessary, would be available to the Corporation on favorable terms, if at all. Results of Operations - --------------------- Third quarter 1997 compared with third quarter 1996 - --------------------------------------------------- The Corporation had a net loss of $243,000 for the third quarter of 1997, compared with a net loss of $200,000 for the third quarter of 1996. The major factors in the higher loss during the quarter this year were a foreign exchange loss on Canadian invested funds which resulted from adverse movement in the exchange rate for the Canadian dollar, and additional costs resulting from the Corporation's increased investor relations activities and expanded operations. Total mineral property and deferred exploration costs during the quarter were $561,000 in 1997, compared with $622,000 in 1996. This decrease resulted from the fact that the Corporation performed trenching and drilling on its properties in 1996 but not in 1997. This decrease was partially offset by higher property and mineral rights expenditures in 1997 on new properties and on properties which had previously been subject to joint ventures (with the joint venture partners picking up these costs). 9 Nine months ended September 30, 1997 compared with nine months ended September 30, 1996 - --------------------------------------------------------------------- The Corporation had a net loss of $973,000 for the nine months ended September 30, 1997, compared with a net loss of $565,000 for the comparable period in 1996. The increase resulted from an increase in general and administrative expenses and office overhead incurred as a result of the Corporation's financing and investor relations activities and expanded operations. The foreign exchange loss during the nine months in 1997 was $127,000 compared with a gain of $24,000 in 1996, again the result of adverse movements in the Canadian dollar during the last twelve months. These additional expenses were offset by interest income of $129,000 earned on invested balances received as a result of the Corporation's equity financings. The Corporation had no interest income in the comparable period in 1996. Total mineral property and deferred exploration costs during the nine months were $1.8 million in 1997 compared with $1.5 million in 1996. There were, however, significant differences within categories of expenditures from 1996 to 1997. During the 1996 period the Corporation spent $350,000 on construction, trenching and drilling, compared with $83,000 during the 1997 period. Also during the 1997 period, the Corporation performed more early stage exploration (including mapping, sampling and analytical work) on several new properties which have not yet reached the drilling stage, resulting in additional assaying and analytical costs ($173,000 in 1997 compared with $70,000 in 1996) and geological consulting costs ($595,000 in 1997 compared with $408,000 in 1996). The Corporation also spent $297,000 during the 1997 period on property and mineral rights, compared with $79,000 in 1996. Deferred expenditures related to mineral properties and exploration increased to $5.25 million at September 30, 1997 compared with $3.34 million a year earlier. Liquidity and Capital Resources - ------------------------------- Due to the nature of the mining industry, the acquisition, exploration and development of mineral properties requires significant expenditures prior to the commencement of production. To date, the Corporation has financed its activities through the sale of equity securities and joint venture arrangements. The Corporation expects to use similar financing techniques in the future. At September 30, 1997, the Corporation had cash and cash equivalents of $5.3 million, compared to cash and cash equivalents of $2.7 million as of September 30, 1996. This increase is due to the receipt of proceeds from the Corporation's 1996 equity financings and the exercise of warrants issued in an earlier financing. Working capital at September 30, 1997 was $5.3 million. The Corporation's operating activities used $1.0 million in the nine months of 1997 compared with $457,000 in the same period in 1996. This reflects the additional general and administrative, financing and investor relations expenditures in 1997 compared with 1996. Financing activities dropped from $3.5 million during the nine months in 1996 (from an equity private placement and the Cominco private placement) to $1.7 million in 1997 (from the issuance of common shares upon exercise of warrants). Net cash used in investing activities increased from $0.9 million during the 1996 period to $2.0 million in 1997, reflecting higher expenditures during the 1997 period. During the 1996 period, the Corporation received $0.7 million in mineral option proceeds. 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities Not Applicable Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders Not Applicable Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits. The following are filed as exhibits to this Quarterly Report: 27 Financial Data Schedule (b) Reports on Form 8-K: None 11 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. MINERA ANDES INC. Date: November 10, 1997 By: /s/ ALLEN V. AMBROSE ----------------- ------------------------------------- Allen V. Ambrose President Date: November 10, 1997 By: /s/ ALLAN J. MARTER ----------------- ------------------------------------- Allan J. Marter Chief Financial Officer (Principal Financial and Accounting Officer) 12 EXHIBIT INDEX Exhibit Number Description 27. Financial Data Schedule 13 EX-27 2 FINANCIAL DATA SCHEDUL
5 This schedule contains summary financial information extracted from the unaudited interim consolidated financial statements of Minera Andes Inc. for the nine-month period ended September 30, 1997 and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1997 SEP-30-1997 5,285,317 0 124,180 0 0 5,409,497 5,535,322 38,482 10,906,337 109,527 0 0 0 15,132,262 (4,335,452) 10,906,337 0 0 0 0 972,672 0 0 (972,672) 0 (972,672) 0 0 0 (972,672) (0.06) 0
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