United States Antimony Corporation - 10-Q quarterly report FY2013 Q3

This report contains both historical and prospective statements concerning the Company and its operations.  Prospective statements (known as "forward-looking statements") may or may not prove true with the passage of time because of future risks and uncertainties.  The Company cannot predict what factors might cause actual results to differ materially from those indicated by prospective statements.

The amount of metal produced in Mexico was approximately 154,000 lbs for the third quarter of 2013 (approximately 133,500 lbs sold) compared to approximately 57,500 pounds produced for the third quarter of 2012, an increase of 168%.  The production from Mexico would have been greater except for additional permits needed to operate new equipment and to use explosives at the Soyatal, and Gaudalupe mining properties.  The operator of the Guadelupe property received an explosives permit subsequent to September 30, 2013, and expects to significantly increase their output of feed to our mill at Puerto Blanco.  Overall, the pounds of antimony produced and sold was up approximately 10,000 lbs ($45,000) from the same quarter in the prior year, but the sales price per pound was down approximately $.14 ($54,000) from the prior year quarter.  Antimony prices have now fallen from a high of $8.11 per lb in 2011, to $4.22 per lb at September 30, 2013.  The cost of production in the USA was down by approximately $90,000 and $470,000 for the quarter and nine months due to the decrease in the price and amount of raw material purchased, but the cost of product from Mexico was up approximately $335,000 and $1,090,000 for the quarter and nine months, respectively, due to the increase in the amount of product made in Mexico. The non-production costs in Mexico for the three and nine months ended September 30, 2013, were down from the same periods a year ago due to the increase in production. The increase in production in Mexico was made despite permit restrictions at the mining properties.  Our efforts in Mexico are resulting in increased product that will be shipped to our Montana plant.  A temporary decrease in the delivery of raw materials to the Montana smelter from a major supplier that occurred again in the third quarter of 2013 resulted in decreased results for the third quarter, in addition to the second quarter, but the deliveries have resumed and are on schedule.  As previously noted, once we are fully permitted, we will have more antimony products from Mexico, and the cost of raw material per pound of antimony produced in Mexico will decrease as we are able to increase production there.    In addition, we expect to have increased revenue from precious metals from our Mexico division.  We presently have unprocessed concentrates in our Mexico inventory that contain an estimated 8,500 ounces of silver and 25 ounces of gold that we cannot process until we have the proper permits.

We contracted in July, 2012, to install a natural gas pipeline for our Mexico smelter operation that we now expect to cost $1.5MM in total.  Our fuel costs are our largest expense in Mexico, and we are expecting the switch from propane to natural gas to decrease our Mexico fuel costs by 75% when the pipeline is complete.  The pipeline is substantially completed, and hookup by PEMEX should be finalized by December 31, 2013. We spent approximately $125,000 on mining and milling of Los Juarez minerals in anticipation of receiving a permit, but have halted expenditures until the permit is granted.  We made the final payment of approximately $90,000 for the mill site at Puerto Blanco during the nine months ended September 30, 2013.

Our zeolite sales decreased by approximately $35,000 and $408,000 for the quarter and nine months ended September 30, 2013, over the comparable periods for 2012, and the sales price per ton also decreased from the prior year.  There was an increase in the tons of zeolite sold of approximately 250 tons for the quarter ended September 30, 2013, over the comparable period for 2012, and a decrease in the sales price due to the mix of products sold.

 Our general and administrative costs were lower for the three and nine months ended September 30, 2013, than the same periods for prior year, but management is still seeking ways to bring these costs down.  At this time, due to the prices of commodities and the need for additional permits in Mexico, we could not determine when we would use the tax benefits being carried forward, and were required to write them down, which resulted in an income tax expense of $229,451.  The net loss for the nine months ended September 30, 2013, includes depreciation and amortization of $503,016.

We sell our antimony products based on a world market price, and we buy a majority of our raw material based on the same market prices.  Analysis of our costs indicate that, for the quarter and six months ended June 30, 2013, raw materials were approximately 50% of our cost of goods sold.  Most of our production costs are fixed in nature, and could not be decreased readily without decreasing our production.  During the quarter and nine months ending September 30, 2013, a $2 per pound decrease in our sales price would have likely caused our gross profit to decrease $1 per pound.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, as appropriate, to allow timely decisions regarding required disclosure. Our chief financial officer conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 Rules

13a-15(e) and 15d-15(e)) as of September 30, 2013.  It was determined that there were material weaknesses affecting our disclosure controls and procedures and, as a result of those weaknesses, our disclosure controls and procedures were not effective as of September 30, 2013. These material weaknesses are as follows:

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During the second quarter of 2013 the Company sold an aggregate of 725,000 of its unregistered common stock to existing stockholders and other parties for $680,192, net of offering costs.  In connection with the sale 362,500 warrants to purchase shares of the Company’s common stock for $1.20 were issued.  The warrants expire in one year and contained a provision that require the Company to make a cash payment to holders of the warrants equal to the Black-Scholes value of the remaining unexercised portion of the warrant in the event of a Fundamental Transaction.

During the three month period ended March 31, 2012, the Company sold shares of its restricted common stock directly and through the exercise of outstanding stock purchase warrants as follows: 1,102,500 shares for $2.00 per share ($2,205,000), and 200,000 shares for $.30 per share ($60,000).

During the three month period ended June 30, 2012, the Company sold shares of its restricted common stock directly and through the exercise of outstanding stock purchase warrants as follows: 953,834 shares for $3.00 per share ($2,851,964), and 25,265 shares were issued as a cashless exercise of warrants.

During the first six months of 2012, $414,661 was paid for fees in connection with the issuance of the above shares, and was recorded as a reduction of additional paid in capital.

Common stock sold is restricted as defined under Rule 144.  In management's opinion, the offer and sale of the securities were made in reliance on exemptions from registration provided by Section 4(2) and Rule 506 of Regulation D of the Securities Act of 1933, as amended and other applicable Federal and state securities laws.  Proceeds received on sales of common stock were used for general corporate purposes.

The registrant has no outstanding senior securities.

The information concerning mine safety violations or other regulatory matters required by Section 1503 (a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Item 104 of Regulation S-K is included in Exhibit 95 to this Annual Report.

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