UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2015.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OF 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________TO__________.
REVETT MINING COMPANY, INC.
(Exact name of small business issuer in its charter)
Delaware |
46-4577805 |
(State or other jurisdiction of incorporation) |
(IRS Employer Identification No.)
|
11115 East Montgomery, Suite G
Spokane Valley, Washington
99206
(Address of principal executive offices)
Registrants telephone number: (509) 921-2294
Indicate by check mark whether registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for a 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.
[X] yes [ ] no
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See definition of large accelerated filer, accelerated
filer and smaller reporting company in rule 12b-2 of the Exchange Act. (Check
One)
Large accelerated filer [ ] |
Accelerated filer [ ] |
Non-accelerated filer [ ] |
Smaller reporting company [X ]
|
Indicate by check whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act.
[ ] yes [X] No
At May 5, 2015 39,273,989 shares of common stock were
issued and outstanding.
1
INDEX
2
Part I Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Revett Mining
Company, Inc. and Subsidiaries |
Contents |
3
Revett Mining Company, Inc. |
Consolidated Balance Sheets |
at March 31, 2015 and December 31, 2014
|
(expressed in thousands of United States dollars
except share and per share amounts) |
(Unaudited) |
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
Cash and cash equivalents |
$ |
722 |
|
$ |
2,896 |
|
Concentrate settlement and other receivables |
|
268 |
|
|
8 |
|
Inventories |
|
3,146 |
|
|
4,573 |
|
Prepaid expenses and deposits |
|
268
|
|
|
325
|
|
Total current assets |
|
4,404 |
|
|
7,802 |
|
Property, plant, and equipment (net) |
|
16,303 |
|
|
16,288 |
|
Restricted cash |
|
6,553 |
|
|
6,551 |
|
Other long term assets |
|
731
|
|
|
733
|
|
|
|
|
|
|
|
|
Total assets |
$ |
27,991 |
|
$ |
31,374 |
|
|
|
|
|
|
|
|
Liabilities and shareholders equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Trade accounts payable |
$ |
524 |
|
$ |
987 |
|
Payroll liabilities |
|
319 |
|
|
711 |
|
Income, property and mining taxes |
|
259 |
|
|
107 |
|
Royalty payable |
|
66 |
|
|
- |
|
Current portion of note payable |
|
4,061
|
|
|
4,377
|
|
Total current liabilities |
|
5,229 |
|
|
6,182 |
|
Reclamation and remediation liability |
|
4,865
|
|
|
4,769
|
|
Total liabilities |
|
10,094 |
|
|
10,951 |
|
|
|
|
|
|
|
|
Commitments and contingencies (note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
|
Preferred stock, $0.01par value, 25,000,000 authorized,
no shares issued and outstanding |
|
- |
|
|
- |
|
Common stock, $0.01 par value, 100,000,000
authorized, 39,273,989 and 39,273,989 shares issued and outstanding at
March 31, 2015 and December 31, 2014, |
|
393 |
|
|
393 |
|
Additional paid-in capital |
|
91,937 |
|
|
91,937 |
|
Retained earnings (deficit) |
|
(74,433 |
) |
|
(71,907 |
) |
Total equity |
|
17,897 |
|
|
20,423 |
|
|
|
|
|
|
|
|
Total liabilities and shareholders equity |
$ |
27,991 |
|
$ |
31,374 |
|
See accompanying notes to unaudited interim consolidated
financial statements.
4
Revett Mining Company, Inc. |
Consolidated Statements of Operations and Comprehensive
income (loss) |
Three months ended March 31, 2015 and 2014
|
(expressed in thousands of United States dollars
except share and per share amounts) |
(unaudited) |
|
|
Three month period |
|
|
Three month period |
|
|
|
ended March 31, 2015 |
|
|
ended March 31, 2014 |
|
Revenue |
$ |
2,268 |
|
$ |
6 |
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
Cost of sales |
|
2,662 |
|
|
- |
|
Troy Mine suspension related costs |
|
898 |
|
|
1,021 |
|
Depreciation and depletion |
|
41 |
|
|
6 |
|
Exploration and development |
|
183 |
|
|
236 |
|
General & administrative: |
|
|
|
|
|
|
Stock based compensation |
|
- |
|
|
368 |
|
Other |
|
869 |
|
|
844 |
|
Accretion of reclamation and remediation
liability |
|
96 |
|
|
95 |
|
|
|
4,749 |
|
|
2,570 |
|
Income
(loss) from operations |
|
|
|
|
|
|
|
|
(2,481 |
) |
|
(2,564 |
) |
|
|
|
|
|
|
|
Other income (expenses): |
|
|
|
|
|
|
Interest income (expense) |
|
(45 |
) |
|
11 |
|
Other income |
|
(2 |
) |
|
1,288 |
|
Gain (loss) on sale of securities |
|
- |
|
|
429 |
|
Foreign exchange gain (loss) |
|
2 |
|
|
2 |
|
Total other income (expenses) |
|
(45 |
) |
|
1,730 |
|
|
|
|
|
|
|
|
Income (loss) before income taxes |
|
(2,526 |
) |
|
(834 |
) |
|
|
|
|
|
|
|
Income tax benefit (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Deferred income tax |
|
- |
|
|
- |
|
|
|
|
|
|
|
|
Net income (loss) |
|
(2,526 |
) |
|
(834 |
) |
|
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
|
|
Unrealized gain on available for sale securities, net
of tax |
|
- |
|
|
45 |
|
|
|
|
|
|
|
|
Comprehensive income (loss) |
|
(2,526 |
) |
$ |
(789 |
) |
|
|
|
|
|
|
|
Net income (loss) for basic and diluted earnings per share |
|
(2,526 |
) |
$ |
(789 |
) |
|
|
|
|
|
|
|
Basic and diluted earnings (loss) per share |
|
(0.06 |
) |
$ |
(0.02 |
) |
Weighted average number of shares
outstanding basic and diluted |
|
39,273,989 |
|
|
34,641,717 |
|
See accompanying notes to unaudited interim consolidated
financial statements.
5
Revett Mining Company, Inc. |
Consolidated Statements of Cash Flows |
Three months ended March 31, 2015 and 2014
|
(expressed in thousands of United States dollars
except share and per share amounts) |
(unaudited) |
|
|
Three month period |
|
|
Three month period |
|
|
|
ended March 31, 2015 |
|
|
ended March 31, 2014 |
|
Cash flows from operating
activities: |
|
|
|
|
|
|
Net income (loss) for the period |
$ |
(2,526 |
) |
$ |
(834 |
) |
Adjustment to reconcile net income (loss)
to net cash provided by (used in) operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
41 |
|
|
6 |
|
Accretion of reclamation and remediation
liability |
|
96 |
|
|
95 |
|
Loss on disposal of equipment |
|
58 |
|
|
- |
|
Deferred financing fee amortization |
|
3 |
|
|
- |
|
Stock based compensation |
|
- |
|
|
368 |
|
Accrued interest from reclamation trust
fund |
|
(2 |
) |
|
(3 |
) |
Loss (gain) on sale of available for sale securities |
|
- |
|
|
(429 |
) |
Changes in: |
|
|
|
|
|
|
Concentrate settlement and other receivable |
|
(260 |
) |
|
(721 |
) |
Inventories |
|
1,427 |
|
|
45 |
|
Prepaid expenses and other assets |
|
57 |
|
|
(117 |
) |
Accounts payable and accrued liabilities |
|
(637 |
) |
|
466 |
|
Net cash provided by (used in) operating activities |
|
(1,743 |
) |
|
(1,124 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing
activities: |
|
|
|
|
|
|
Purchase of plant and equipment |
|
(115 |
) |
|
(1,911 |
) |
Proceeds from the sale of available for
sale securities |
|
- |
|
|
959 |
|
Net cash used in investing activities |
|
(115 |
) |
|
(952 |
) |
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
Proceeds from the issuance of common stock,
net |
|
- |
|
|
3,354 |
|
Repayment of capital leases |
|
(316 |
) |
|
(205 |
) |
Net cash provided by (used in) financing activities |
|
(316 |
) |
|
3,149 |
|
|
|
|
|
|
|
|
Net increase (decrease) in cash and cash equivalents |
|
(2,174 |
) |
|
1,073 |
|
Cash and cash equivalents, beginning of period |
|
2,896 |
|
|
7,951 |
|
Cash and cash equivalents, end of period |
$ |
722 |
|
$ |
9,024 |
|
See accompanying notes to unaudited interim consolidated
financial statements.
6
Revett Mining Company, Inc. |
Consolidated Statements of Shareholders Equity
|
Three months ended March 31, 2015 and year ended
December 31, 2014 |
(expressed in thousands of United States dollars
except share and per share amounts) |
(unaudited) |
|
|
Common Shares |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional |
|
|
Accumulated other |
|
|
Retained |
|
|
|
|
|
|
|
|
|
|
|
|
Paid-in |
|
|
Comprehensive |
|
|
earnings |
|
|
|
|
|
|
Shares |
|
|
Amount |
|
|
Capital |
|
|
Loss |
|
|
(deficit) |
|
|
Total |
|
Balance, December 31, 2013 |
|
34,596,387 |
|
$ |
88,495 |
|
|
|
|
$ |
45 |
|
$ |
(9,984 |
) |
$ |
78,556 |
|
Reclassification due to change in par value
of common shares |
|
|
|
|
(88,149 |
) |
|
88,149 |
|
|
- |
|
|
- |
|
|
- |
|
Issue of shares for exercise of options |
|
158,500 |
|
|
2 |
|
|
77 |
|
|
- |
|
|
- |
|
|
79 |
|
Issue of shares |
|
4,499,102 |
|
|
45 |
|
|
3,292 |
|
|
- |
|
|
- |
|
|
3,337 |
|
Issue of shares for compensation |
|
20,000 |
|
|
- |
|
|
16 |
|
|
- |
|
|
- |
|
|
16 |
|
Reclassification of gain on sale of
marketable securities, net of tax |
|
- |
|
|
- |
|
|
- |
|
|
(45 |
) |
|
- |
|
|
(45 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation on options granted |
|
- |
|
|
- |
|
|
403 |
|
|
- |
|
|
- |
|
|
403 |
|
Net loss for the period |
|
- |
|
|
- |
|
|
|
|
|
- |
|
|
(61,923 |
) |
|
(61,923 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014 |
|
39,273,989 |
|
$ |
393 |
|
$ |
91,937 |
|
$ |
- |
|
$ |
(71,907 |
) |
$ |
20,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for the period |
|
|
|
|
- |
|
|
- |
|
|
- |
|
|
(2,526 |
) |
|
(2,526 |
) |
Balance, March 31, 2015 |
|
39,273,989 |
|
$ |
393 |
|
$ |
91,937 |
|
$ |
- |
|
$ |
(74,433 |
) |
$ |
17,897 |
|
See accompanying notes to unaudited interim consolidated
financial statements
7
1. |
Basis of Presentation and
Liquidity |
In the opinion of management, the accompanying unaudited
interim consolidated balance sheets and consolidated statements of operations
and comprehensive income (loss), cash flows, and shareholders equity contain
all adjustments, consisting of normal recurring items, necessary to present
fairly, in all material respects, the financial position of Revett Mining
Company, Inc. (Revett Mining, the Company, we or us) as of March 31,
2015 and December 31, 2014, and the results of its operations and its cash flows
for the three month periods ended March 31, 2015 and 2014. The operating and
financial results for Revett Mining for the three months ended March 31, 2015
are not necessarily indicative of the results that may be expected for the year
ended December 31, 2015.
These unaudited interim financial statements have been prepared
by management in accordance with generally accepted accounting principles used
in the United States of America (U.S. GAAP) and are presented in U.S. dollars.
These unaudited interim consolidated financial statements do not include all
note disclosures required by U.S. GAAP on an annual basis, and therefore should
be read in conjunction with the annual audited consolidated financial statements
for the year ended December 31, 2014 filed with the appropriate securities
regulatory authorities.
Revett Mining (formerly known as Revett Minerals Inc.) was
incorporated in Canada in August 2004 to acquire Revett Silver Company and
undertake a public offering of its common shares, transactions that were
completed in February 2005. Revett Silver Company, a Montana corporation, was
organized in April 1999 to acquire the Troy mine (Troy) and the Rock Creek
project (Rock Creek) from ASARCO Incorporated and Kennecott Montana Company,
transactions that were completed in October 1999 and February 2000. Revett
Mining Company changed its jurisdiction of incorporation (from Canada to
Delaware) and its name (from Revett Minerals to Revett Mining Company) in
February 2014, following approval by its shareholders at a special meeting held
in January 2014. The Company conducts business through four Montana
corporations, all subsidiaries of its wholly-owned Revett Silver Company
subsidiary: Troy Mine, Inc., RC Resources, Inc., Revett Exploration, Inc. and
Revett Holdings, Inc.
Troy is an underground silver and copper mine located in
northwestern Montana. ASARCO operated the mine from 1981 to 1993, and then
placed it on care and maintenance because of low metals prices. We restarted
mining operations in late 2004 and commenced commercial production in early
2005. We operated Troy continuously until December 2012, when operations were
suspended due to unstable ground conditions in portions of the mine. After an
unsuccessful attempt to find an alternative route to our reserve mining areas, a
decision was made to construct a new decline from the main haulage route to the
North C Beds, giving access to the A and C Beds, and then continue to the
undeveloped I Bed mining areas. We successfully reached the North C Beds in the
fourth quarter of 2014 and resumed limited ore production, but were compelled to
place Troy on care and maintenance early in 2015 due to low metals prices.
Development work to the I Beds ceased and the milling operations continued
through the end of January 2015. An orderly shutdown took place during February
2015, with the expectation that development and operations may resume in a more
favorable price environment.
Liquidity Considerations and Going Concern
The accompanying consolidated financial statements have been prepared under the assumption that the Company will continue as a going concern. The Company does not have sufficient cash to fund normal operations and meet its debt obligations for the next twelve months without deferring payments on certain current liabilities or raising additional funds. The Company’s continued losses and lack of capital raise substantial doubt about the Company’s ability to continue as a going concern as of March 31, 2015. In addition, our auditors included an emphasis of a matter paragraph in their audit opinion on our 2014 financial statements. Although the Company raised some additional capital in 2014, it was not sufficient to enable us to meet our obligations and provide access to the Troy ore reserves. On March 26, 2015, the Company entered into an agreement and plan of merger with Hecla pursuant to which, and subject to approval of the Company’s stockholders and the satisfaction of other conditions specified in the agreement, a subsidiary of Hecla would merge with and into the Company in a transaction in which the Company’s stockholders would receive 0.1622 of a share of Hecla common stock for each share of common stock of Revett. The merger is subject to approval of the Company’s stockholders, with the meeting to vote on the proposed merger currently scheduled for June 12, 2015.
If our proposed merger with Hecla is not completed, we will necessarily have to seek additional capital or consider other alternatives, which could include bankruptcy or the sale of some or all of our assets. Our business has been materially and adversely affected by the decline in copper and silver prices and by the suspension of commercial mining operations at Troy.
8
Because Troy has been placed on care and maintenance, there is
no assurance that production will resume. Accordingly, the Company determined
there was impairment of its property, plant and equipment as of December 31,
2014.
Our earnings and cash flows are subject to copper and silver
price volatility, the underlying value and recoverability of mineral resources
at Rock Creek, and obtaining the necessary operating permits for Rock Creek.
2. |
Changes affecting the 2015 consolidated financial
statements and future accounting changes: |
In May 2014, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update No. 2014-09, Revenue from Contracts with
Customers (ASU 2014-09), which supersedes nearly all existing revenue
recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to
recognize revenues when promised goods or services are transferred to customers
in an amount that reflects the consideration to which an entity expects to
receive for those goods or services. ASU 2014-09 defines a five step process to
achieve this core principle and, in doing so, more judgment and estimates may be
required within the revenue recognition process than are required under existing
U.S. GAAP.
The standard is effective for annual periods beginning after
December 15, 2016, and interim periods therein, using either of the following
transition methods: (i) a full retrospective approach reflecting the application
of the standard in each prior reporting period with the option to elect certain
practical expedients, or (ii) a retrospective approach with the cumulative
effect of initially adopting ASU 2014-09 recognized at the date of adoption
(which includes additional footnote disclosures). We are currently evaluating
the impact of our pending adoption of ASU 2014-09 on our consolidated financial
statements and have not yet determined the method by which we will adopt the
standard in 2017.
In August 2014, the FASB issued ASU 2014-15, Disclosure of
Uncertainties about an Entitys Ability to Continue as a Going Concern. ASU
2014-15 introduces an explicit requirement for management to assess and provide
certain disclosures if there is substantial doubt about an entitys ability to
continue as a going concern. ASU 2014-15 is effective for the annual period
ending after December 15, 2016. Early adoption is permitted. The Company expects
to adopt this guidance when effective, and upon adoption, will evaluate going
concern based on this guidance.
9
The major components of the Companys inventory accounts are as
follows:
|
|
March 31, 2015 |
|
|
December 31, 2014 |
|
Concentrate inventory |
$ |
- |
|
$ |
1,248 |
|
Material and supplies |
|
3,146
|
|
|
3,325
|
|
|
$ |
3,146 |
|
$ |
4,573 |
|
4. |
Mineral Property, Plant, Equipment and Mine
Development |
The major components of the Companys mineral property, plant,
and equipment accounts are as follows:
|
|
March 31, |
|
|
December 31, |
|
|
|
2015 |
|
|
2014 |
|
Troy: |
|
|
|
|
|
|
Property acquisition and development costs |
$ |
2,460 |
|
$ |
2,460 |
|
Plant and equipment |
|
2,261 |
|
|
2,320 |
|
Construction in progress |
|
1,710 |
|
|
1,595 |
|
Buildings and structures |
|
910 |
|
|
910 |
|
|
|
7,341 |
|
|
7,285 |
|
Rock Creek: |
|
|
|
|
|
|
Property acquisition costs |
|
8,022 |
|
|
8,022 |
|
Other, corporate |
|
953 |
|
|
953 |
|
Other, mineral properties |
|
28
|
|
|
28
|
|
|
|
16,344 |
|
|
16,288 |
|
Accumulated depreciation and depletion: |
|
|
|
|
|
|
Troy Property acquisition and
development costs |
|
(24 |
) |
|
- |
|
Troy plant and equipment |
|
(8 |
) |
|
- |
|
Troy buildings and structures |
|
(3 |
) |
|
- |
|
|
|
(35 |
) |
|
- |
|
Other corporate assets |
|
(6 |
) |
|
- |
|
|
|
(41 |
) |
|
- |
|
|
$ |
16,303 |
|
$ |
16,288 |
|
We determined that there was an impairment of property, plant
and equipment as of December 31, 2014, due to Troy being placed on care and
maintenance and the absence of any assurance that production would be resumed.
The estimated fair value of the impairment to these long-lived assets was
determined using a market approach that was in turn based on Heclas offer to
acquire the Company for $20.4 million. The impairment charge of $54.7 million
was allocated to each long-lived asset class on a relative carrying value basis
as per Accounting Standards Codification (ASC) 360-10. This impairment has
resulted in a new cost basis for the property, plant and equipment and future
depreciation will be based on this carrying value.
Revett Holdings Inc., a wholly owned subsidiary of the Company,
owns undeveloped real property having a carrying value of $0.8 million ($3.6
million less impairment adjustment of $2.8 million) that were purchased in order to meet mitigation
requirements at Rock Creek. This property will be transferred to the U.S. Forest
Service or the State of Montana once the phase 1 evaluation program or phase 2
mine construction and development of Rock Creek commences. The cost of the
property will be amortized if Rock Creek is placed into production.
10
5. |
Available for sale
securities |
During the quarter ended March 31, 2014, the Company sold all
of its available for sale equity securities for approximately $1.0 million, and
recognized a gain of $0.4 million.
At March 31, 2015 and December 31, 2014, the balance of the
Companys long-term debt obligations were as follows:
|
|
March 31, |
|
|
Dec. 31, |
|
|
|
2015 |
|
|
2014 |
|
Note payable |
$ |
4,061 |
|
$ |
4,377 |
|
Less current portion |
|
(4,061 |
) |
|
(4,377 |
) |
|
$ |
- |
|
$ |
- |
|
The Company entered into a new note payable in August 2014. The amount borrowed was $5 million with a 30 month term and a 6.25% interest rate. Monthly principal and interest payments are $0.2 million ($2.2 million annually). The note is collateralized by certain equipment at Troy. The Company used a portion of the proceeds to pay off the two remaining capital leases which principal balances were approximately $0.4 million. At March 31, 2015, the Company was in default on the note. In April, the note was modified to provide for monthly interest only payments until September 2015 when principal payments resume. The total balance is recorded as current since the Company does not anticipate being able to pay the amounts due in 2015 and therefore, will be in default on the note.
7. |
Share Capital |
|
|
(a) |
Common Stock |
During the first quarter 2014, the Companys shareholders
approved a change of jurisdiction of incorporation from Canada to the United
States. This resulted in a change in the par value of the Companys common stock
from no par value per share to $0.01 per share.
The Company has one class of $0.01 par value common stock of
which 100,000,000 are authorized for issue. The holders of common stock are
entitled to receive dividends without restriction when and if declared by the
board of directors. Holders of the Companys common stock are not entitled to
preemptive rights to acquire additional shares of common stock and do not have
cumulative voting rights.
During the quarter ended March 31, 2015, the Company did not
issue any common shares.
During the quarter ended March 31, 2014, the Company issued
32,500 shares of common stock upon the exercise of stock options and 4,499,100
shares of common stock through a private placement for cash, resulting in
proceeds to the Company of $3.4 million.
11
The Company is authorized to issue 25,000,000 shares of
preferred stock having a par value of $0.01 per share. The Companys board of
directors is authorized to create any series and, in connection with the
creation of each series, to fix by resolution the number of shares of each
series, and the designations, powers, preferences and rights; including
liquidation, dividends, conversion and voting rights, as they may determine. At
March 31, 2015, no series of preferred stock had been created or authorized, and
no shares of preferred stock were outstanding.
The Companys Equity Incentive Plan authorizes the Company to
reserve and have available for issue 6,500,000 shares of common stock; 1,015,000
stock options were granted to employees during the three months ended March 31,
2014. Each option has an exercise price of $0.79 and expires on March 29, 2019.
The weighted average fair value per share of these options was $0.344, for a
total value of $0.4 million. The Company used the Black-Scholes option pricing
model with a risk-free interest rate of 0.67%, volatility of 71.87% and an
expected life of the options of 30 months to estimate the fair values of the
options. The options fully vested on the date of grant. In addition, there were
60,000 stock options granted to consultants during the three months ended March
31, 2014, each having an exercise price of $0.79 and expiring on March 29, 2017.
The weighted average fair value per share of these options was $0.32, for a
total value of $2,000. The Company used the Black-Scholes option pricing model
with a risk-free interest rate of 0.285%, volatility of 87.45% and an expected
life of the options of 18 months to estimate the fair values of the options.
These stock options also fully vested on the date of grant.
During the quarter ended March 31, 2015, 1,164,500 options were
cancelled or expired and no options were exercised.
During the three months ended March 31, 2014, 72,500 options
were cancelled or expired, and 32,500 options were exercised. As of March 31,
2015 and 2014, the intrinsic value of options outstanding and exercisable was $
nil and $40,000, respectively.
Total stock-based compensation recognized during the three months ended March 31, 2015 and 2014 was $ 0 and $400,000; During the three months ended March 31, 2015 and 2014, a total of $ nil and $200,000 in stock option compensation was attributable to employees at Troy, and is included in the amounts reported in general and administrative expense.
12
As of March 31, 2015, the following stock options were
outstanding:
Options |
|
Options |
|
|
Exercise |
|
|
Expiration |
|
Granted
|
|
Exercisable |
|
|
Price |
|
|
Date |
|
|
|
|
|
|
|
|
|
|
|
10,000 |
|
10,000 |
|
|
1.17 |
|
|
September 6, 2015 |
|
20,000 |
|
20,000 |
|
|
2.50 |
|
|
November 1, 2015 |
|
20,000 |
|
20,000 |
|
|
1.17 |
|
|
September 6, 2016 |
|
321,000 |
|
321,000 |
|
|
4.98 |
|
|
March 21, 2016 |
|
15,000 |
|
15,000 |
|
|
1.26 |
|
|
August 26, 2016 |
|
60,000 |
|
60,000 |
|
|
0.79 |
|
|
March 29, 2017 |
|
388,000 |
|
388,000 |
|
|
4.18 |
|
|
April 1, 2017 |
|
20,000 |
|
20,000 |
|
|
3.77 |
|
|
May 3, 2017 |
|
383,000 |
|
383,000 |
|
|
2.16 |
|
|
March 21, 2018 |
|
625,000 |
|
625,000 |
|
|
0.79 |
|
|
March 29, 2019 |
|
30,000 |
|
30,000 |
|
|
0.77 |
|
|
May 29, 2019 |
|
20,000 |
|
20,000 |
|
|
1.00
|
|
|
August 19, 2019 |
|
1,912,000 |
|
1,912,000 |
|
$ |
2.53 |
|
|
|
|
(d) |
Stock Purchase Warrants |
The following stock purchase warrants were outstanding at March
31, 2015:
Number |
|
Exercise price |
|
|
Expiration |
|
|
|
|
|
|
|
|
1,153,844 |
|
USD $ 1.00 |
|
|
March 26, 2016 |
|
1,095,705 |
|
USD $ 1.00 |
|
|
March 31, 2016 |
|
2,249,549 |
|
|
|
|
|
|
During the three months ended March 31, 2014, 2,249,549 new
warrants were issued and no warrants were exercised. During the three months
ended March 31, 2015, no warrants were issued or exercised.
8. |
Commitments and
Contingencies |
The following table shows the changes in the reclamation
liability for the periods indicated.
|
|
Three months ended |
|
|
Three months ended |
|
|
|
March 31, 2015 |
|
|
March 31, 2014 |
|
|
|
|
|
|
|
|
Reclamation and remediation liability
beginning of period |
$ |
4,769 |
|
$ |
4,613 |
|
Accretion expense |
|
96
|
|
|
95
|
|
Ending balance |
$ |
4,865 |
|
$ |
4,708 |
|
13
(b) |
Rock Creek Development |
Rock Creek is located in Sanders County, Montana, approximately
five miles northeast of Noxon, Montana and sixteen air miles southeast of Troy.
The project comprises 99 patented lode-mining claims, 370 unpatented lode-mining
claims, five tunnel site claims, 85 mill site claims and 754 acres of fee land.
The patented claims lying within the Cabinet Mountain Wilderness Area convey
mineral rights only; the patented claims lying outside the wilderness area
convey both mineral and surface rights and title. The patented claims were
legally surveyed in 1983, patented in 1989, and occupy an area of approximately
1,809 acres. We conduct our development activities at Rock Creek through RC
Resources Inc., another of our second-tier operating subsidiaries. RC Resources
Inc. is also the record holder of the various claims and fee lands comprising
the project.
The proposed development of Rock Creek will occur in two
phases. The first phase, a two year evaluation program, is expected to confirm
and better define the economic and technical viability of the project and
reconfirm geotechnical assumptions. This initial phase will include the
construction of a 7,000 foot evaluation adit to collect additional technical
information; underground infill drilling to establish and confirm mineral
resource estimates; geotechnical design studies; bulk sampling of the
mineralization for use in metallurgical testing; and, to collect and evaluate
hydrologic information. We presently estimate the evaluation program will cost
$25 million to $30 million. Once the program is completed, a feasibility study
will be commissioned, and, if it is positive, financing to construct a10,000 ton
per day mine and process facility will be sought. Additional information
concerning our proposed development of Rock Creek is set forth in Item 2 of this
report.
The evaluation program cannot begin until final permits and
approvals from the various federal and state agencies that exercise jurisdiction
over the project are received. Rock Creek is partially located on United States
Forest Service (the Forest Service) land within the Kootenai National Forest
and under the Cabinet Mountains Wilderness Area, and federal and state approval
is required before development can commence. In 2001, the Forest Service issued
a Final Environmental Impact Statement (Final EIS) under the National
Environmental Policy Act (NEPA). In 2003, the Forest Service and the Montana
Department of Environmental Quality (the DEQ) issued a joint administrative
decision approving our proposed plan of operations at Rock Creek (the Record of
Decision). The Record of Decision was based primarily on the findings in the
Final EIS and a companion biological opinion (the Biological Opinion) issued
by the U.S. Fish and Wildlife Service (USFWS) in 2003, pursuant to the
requirements of the Endangered Species Act (ESA). The project was challenged
by several regional and national environmental advocacy groups, culminating in a
May 2010 Montana federal district court decision that upheld the Biological
Opinion but remanded the Record of Decision to the Forest Service to address
several NEPA procedural deficiencies. The federal district court decision
upholding the Biological Opinion was affirmed by the Ninth Circuit Court of
Appeals in November 2012. The Forest Service is currently working to develop a
Supplemental EIS that will comply with the Federal District Courts decision.
We are also working to satisfy other federal and state
permitting requirements that are required for phase 1 development. These include
grizzly bear mitigation requirements, reclamation bonding, designing and
constructing a water treatment facility, and improving the road leading to the
proposed evaluation adit site.
We currently own approximately 673 acres of fee land, located
in Lincoln and Sanders Counties, that has been designated as grizzly bear
habitat mitigation lands for Rock Creek. This land and other current and future real estate holdings that are not
essential to our day to day mining operations are or will be, held by Revett
Holdings, Inc., a wholly-owned Montana subsidiary of Revett Silver.
14
Although the Company believes environmental and operating
permits will ultimately be obtained, it is possible that successful challenges
could delay or prevent the development of the Rock Creek project which, could
result in the impairment and write-down of the carrying value related to the
Rock Creek property.
9. |
Derivative instruments |
Concentrate Sales Contracts
The Company enters into concentrate sales contracts with
third-party buyer. The contracts, in general, provide for a provisional payment
based upon provisional assays and quoted metal prices and the provisionally
priced sales contain an embedded derivative that is required to be separated
from the host contract for accounting purposes. The host contract is the
receivable from the sale of concentrates at the forward price at the time of
sale. The embedded derivative, which is the final settlement based on a future
price, does not qualify for hedge accounting. These embedded derivatives are
recorded in concentrate settlement and other receivables on the consolidated
balance sheet and are adjusted to fair value through earnings each period until
the date of final settlement.
Fixed Forward Contracts
At March 31, 2015, the Company did not have any fixed forward
contracts to sell silver or copper.
10. |
Fair Value of Financial
Instruments |
The carrying values of cash and cash equivalents, accounts
receivable, restricted cash, and accounts payable and accrued liabilities
approximate fair value due to their short time to maturity or ability to
immediately convert them to cash in the normal course. The carrying values of
notes payable obligations approximate fair market values as they are based on
market rates of interest.
The Company classifies financial instruments recognized at fair
value in accordance with a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The three levels of the fair
value hierarchy are described below:
Level 1 |
Unadjusted quoted prices in active markets that are
accessible at the measurement date for identical, unrestricted assets or
liabilities; |
|
|
Level 2 |
Quoted prices in markets that are not active, or inputs
that are observable, either directly or indirectly, for substantially the
full term of the asset or liability; and |
|
|
Level 3 |
Prices or valuation techniques that require inputs that
are both significant to the fair value measurement and unobservable
(supported by little or no market activity). |
The following table sets forth the Companys financial assets
and liabilities measured at fair value on a recurring basis by level within the
fair value hierarchy. Assets and liabilities are classified in their entirety
based on the lowest level of input that is significant to the fair value
measurement.
15
|
|
Fair value at March 31, 2015 |
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
722 |
|
$ |
722 |
|
$ |
- |
|
$ |
- |
|
|
|
Fair value at December
31, 2014 |
|
|
|
Total |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
$ |
2,896 |
|
$ |
2,896 |
|
$ |
- |
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Companys cash and cash equivalent instruments are
classified within Level 1 of the fair value hierarchy because they are valued
using quoted market prices.
For the three months ended March 31, 2015 and 2014, the Company
did not report a tax provision or benefit.
As of March 31, 2015 and December 31, 2014, management of the
Company used the guidelines contained in ASC 740 and evaluated the positive and
negative evidence available to determine whether a valuation allowance against
the deferred tax assets should be established. Management has determined that
the Companys negative evidence of a cumulative loss position after significant
permanent differences and the lack of future taxable income based on current
conditions regarding Troy outweighted the positive evidence. Management believes
that it is more likely than not that the deferred tax assets will not be
recovered. Therefore a valuation allowance equal to 100% of the deferred tax
assets has been recorded.
The income tax provision (benefit) for the three months ended
March 31, 2015 and 2014 varies from the statutory rate primarily because of the
change in valuation allowance for net deferred tax assets and depletion. The
Company has estimated an effective tax rate of zero for 2015.
The Company has U.S. net operating loss carry forward of $58.0
million that expires at various dates between 2019 and 2035. Montana state net
operating losses ($45.0 million) expire at various dates between 2015 and 2022.
The Company has a net capital loss carry forward of approximately $1.5 million
that expires in 2017 and 2018.
As a result of the domestication of the Company from Canada to
Delaware, the Company forfeited a Canadian net operating loss of approximately
$10.6 million. The Companys deferred tax asset and valuation allowance has been
reduced by approximately $2.8 million. The Company reviewed all other tax
aspects of the reorganization and concluded there was no material tax liability
regarding the reorganization.
16
12. |
Related Party Transactions |
Trafiguara AG has a contract to purchase the silver and copper
concentrates produced at Troy. Trafigura Beheer B.V., which is affiliated with
Trafigura AG, is the beneficial owner of more than five percent of our
outstanding common shares, and is therefore a related party. During the three
months ended March 31, 2015 and 2014, Trafigura AG paid us $2.3 million and $0.0
million for our concentrate, respectively.
On April 17, 2015, the Company and two of its subsidiaries,
Revett Silver Company and Revett Holdings, Inc., entered into a term loan and
security agreement with Hecla. The term loan is secured by a mortgage on lands
owned by the Companys Revett Holdings, Inc. second-tier subsidiary and allows
the Company to borrow up to $1.5 million at Libor plus 5%. The term loan matures
on June 30, 2015.
On April 27, 2015, the Company and CAT Financial Services
Corporation agreed to modify the original loan agreement to allow the Company to
make interest only payments for March 2015 through August 2015, then resuming
the full principal and interest payments.
17
Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
This Managements Discussion and Analysis (MD&A) of the
financial results of the Company for the three month period ended March 31,
2015, should be read in conjunction with the unaudited interim financial
statements and notes as at and for the three months ended March 31, 2015 which
form part of this report. In addition, this MD&A and related financial
statements should be read in conjunction with the Companys 2014 audited
consolidated financial statements and the related Managements Discussion and
Analysis contained in the Companys Annual Report on Form 10-K. These financial
statements are expressed in United States dollars, unless otherwise stated, and
they are prepared in accordance with United States generally accepted accounting
principles (GAAP).
Some of the statements in this MD&A are forward looking
statements that are subject to risk factors set out in the subsection titled
Principal Risks and Uncertainties below.
Overview and Important Factors Influencing Results for the
Three Months Ended March 31, 2015
As at May 5, 2015, the Company owns a 100% interest in Revett
Silver Company (Revett Silver), which in turn owns 100% of Troy, Inc., RC
Resources, Inc., Revett Exploration, Inc. and Revett Holdings, Inc. Rock Creek
is a development stage silver and copper property located in northwest Montana.
Troy is a silver and copper mine also located in northwest Montana.
We suspended operations at Troy in December 2012 due to
unstable ground conditions in portions of the mine. In November 2013, after
unsuccessful attempts to find alternative routes to our reserve mining areas and
with approval from the Mine Safety and Health Administration, we commenced
construction of a new decline from the main service adit to access the North C
Beds and the undeveloped I Beds. After successfully reaching the North C Beds in
the fourth quarter of 2014 and resuming limited ore production, the Company
decided, due to low metal prices, to place Troy on care and maintenance.
Development work to the I Beds ceased and the milling operations continued
through the end of January 2015. An orderly shutdown took place during the month
of February 2015, with the expectation that development and operations might
resume when metals prices improved.
Although we took steps to improve our liquidity during 2014, we
currently do not have enough cash on hand to complete the I-Bed development or
continue operations. If the proposed merger of the Company with and into Hecla
does not occur, we will necessarily have to explore other alternatives, which
could include bankruptcy or the sale of some or all of our assets.
Overall Performance
As at March 31, 2015 the Company has working capital deficiency
of $0.8 million. Due to the suspension of mining operations as discussed above
in January 2015we were unable to generate revenues, which resulted in a net
loss. For the three month period ended March 31, 2015, the Company reported a
net loss after taxes of $2.5 million or $0.06 a share compared to a net loss
after taxes of $0.8 million or $0.02 per share for the three months ended March
31, 2014.
18
Results of Operations for the Three Months Ended March 31,
2015 compared to the same period in 2014.
Financial Results:
|
a) |
Revenue: Revenue for the first quarter of 2015
reflects the limited mine production in late 2014 and in January of 2015.
We were able to produce eight rail cars of concentrate which were sold
during the first quarter of 2015. There was no invoicing for concentrate
sales during the first quarter of 2014 due to the suspension of mining
activities described above. |
|
|
|
|
b) |
Cost of sales and Troy Mine suspension related costs: The 2015
spending reflects the costs related to mining ore in January and includes
the employee layoff related costs in February and March. The 2014 costs
reflect the general cost of maintaining the Mine. All of the spending
related to the new access adits was capitalized in 2014 |
|
|
|
|
c) |
Depreciation and depletion: Depreciation expense
for the first quarter 2015 was higher than that for the first quarter 2014
due to limited mine production that occurred in 2015. There was no
production in the first quarter 2014. The majority of the plant and
equipment at Troy is depreciated using the units-of-production method and
the effect of the suspension of mining operations resulted in little or no
depreciation expense for the Troy Mine in 2014. |
|
|
|
|
d) |
Exploration and development: This expense includes
$0.2 million spending for Rock Creek permitting. The spending in 2015 is
lower than 2014 ($0.3 million). We did not have any exploration spending
during the first quarter of 2015 or 2014. |
|
|
|
|
e) |
General and administration costs: The decrease in
the corporate administration costs during the first quarter of 2015 and
2014 is a result of efforts to conserve cash due to suspension of mining
activities at the Troy Mine. |
|
|
|
|
f) |
Net loss: The net loss for the first quarter 2015
and 2014 reflects the suspension of mining activities at the Troy
Mine. |
Financing Activities
During the first quarter of 2015, the Company did not enter
into any new capital leases or notes payable. The Company has the following
contractual financial obligations (in thousands of USD):
|
|
|
|
|
Current |
|
|
1 to 3 |
|
|
3 to 5 |
|
|
5 years or |
|
Contractual obligation |
|
Total |
|
|
portion |
|
|
years |
|
|
years |
|
|
more |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Note payable obligations |
$ |
4,061 |
|
$ |
4,061 |
|
|
- |
|
|
- |
|
|
- |
|
Long term reclamation Costs |
|
12,743
|
|
|
- |
|
|
- |
|
|
- |
|
$ |
12,743
|
|
Total contractual obligations
|
$ |
16,804 |
|
$ |
4,061 |
|
|
- |
|
|
- |
|
$ |
12,743 |
|
Revett Silver has also entered into a number of operating
leases relating to the production and transportation of the copper concentrate
produced at Troy. All of these leases expire in 2015 and many may be renewed annually. Our obligations in 2015 under the
terms of these leases are $0.4 million.
19
Liquidity and Capital Resources
The Companys liquidity position is directly related to the
level of concentrate production, cost of this production and the provisional and
final prices received for the copper and silver in the concentrate that is sold.
At March 31, 2015, working capital was a negative $0.8 million, including cash
and cash equivalents of $0.7 million. At March 31, 2015, concentrate receivable
and other receivables was $0.3 million compared to $0.0 million at December 31,
2014.
Delays in recommencing production at Troy, along with declining
copper and silver prices have eroded our cash and working capital position.
Because of our need to conserve cash, nearly all discretionary capital spending
and exploration spending has been placed on hold.
The Company has not raised sufficient external financing to meet its obligations and provide access to Troy mine ore reserves. Therefore, on March 26, 2015, the Company entered into an agreement and plan of merger with Hecla pursuant to which, and subject to approval of the Company’s stockholders and the satisfaction of other conditions specified in the agreement, a subsidiary of Hecla would merge with and into the Company in a transaction in which the Company’s stockholders would receive 0.1622 of a share of Hecla common stock for each share of common stock of Revett. The merger is subject to approval of the Company’s stockholders, with the meeting to vote on the proposed merger currently scheduled for June 12, 2015.
Off Balance Sheet Arrangements
Royal Gold, Inc. holds a 3% gross smelter royalty on a defined
area of production from Troy Mine and a 1% net smelter royalty on production
from Rock Creek pursuant to the terms of an amended royalty agreement dated
October 13, 2009.
Related Party Transactions
Trafigura AG is the sole purchaser of the silver and copper
concentrate we produce at Troy. It is also the beneficial owner of more than
five percent of our outstanding common shares, and is therefore a related party.
During the three months ended March 31, 2015 and 2014, Trafigura AG paid us $2.3
million and $0.0 million for our concentrate, respectively.
Principal Risks and Uncertainties
The following risk factors and other information in this report
contain forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. If any of the following
events or developments described below actually occur, our business, financial
condition or operating results could be materially harmed. This could cause the
market price of our common stock to decline.
Liquidity considerations and going concern.
The accompanying consolidated financial statements of the
Company have been prepared under the assumption that it will continue as a going
concern. The Company does not have sufficient cash to fund normal operations and
meet debt obligations for the next twelve months without deferring payments on
certain current liabilities or raising additional funds. The Companys continued
losses and lack of capital raise substantial doubt about its ability to continue
as a going concern. Although the Company raised some additional capital in 2014,
it is not sufficient to enable it to meet its obligations and provide access to
the Troy ore reserves. Should its proposed merger with Hecla not occur,
the Company will necessarily have to consider other alternatives in order to
address its capital spending and debt service obligations, which could include
bankruptcy or the sale of some or all of its assets.
Operations at Troy mine are on care and
maintenance.
The Company operated Troy continuously until December 2012,
when operations were suspended due to unstable ground conditions in portions of the
mine. In November 2013, the Company commenced construction of a new access
decline from the main service adit to the North C Bed and to the undeveloped I
Bed. In the fourth quarter of 2014, the Company successfully reached the North C
Beds and resumed limited mining and milling operations. However, on January 19,
2015 the Company placed Troy on care and maintenance due to low metals prices.
Although the Company took steps to improve its liquidity during the first
quarter of 2014, it currently does not have sufficient cash on hand to re-start
mining and milling operations or complete development to the I Beds. If the
Company is not able to complete the proposed merger with Hecla, it will
necessarily have to obtain additional capital in order to address its capital
spending and debt service requirements or consider other alternatives, which
could include bankruptcy or a sale of all or substantially all of its assets.
The Companys business has been materially and adversely affected by the decline
in copper and silver prices and by the suspension of commercial mining
operations at Troy.
20
Copper and silver prices fluctuate markedly.
The Companys operations are significantly influenced by the
prices of copper and silver. Copper and silver prices fluctuate widely and are
affected by numerous factors that are beyond the Companys control, such as the
strength of the United States dollar, global and regional industrial demand, and
the political and economic conditions of major producing countries throughout
the world. During the last four years, annual average copper prices have
fluctuated from a low of $3.11 per pound in 2014 to a high of $4.00 per pound in
2011, and world average annual silver prices have fluctuated from a low of
$19.08 per ounce in 2014 to a high of $35.11 per ounce in 2011.
There are other formidable risks to mining.
The Company is subject to all of the risks inherent in the
mining industry, including industrial accidents, labor disputes, environmental
related issues, unusual or unexpected geologic formations, cave-ins, surface
subsidence, flooding, power disruptions and periodic interruptions due to
inclement weather. These risks could result in damage to or destruction of the
Companys mineral properties and production facilities, personal injury,
environmental damage, delays, monetary losses and legal liability. In addition,
the Company is subject to competition for new minerals properties, management
and skilled miners from other mining companies, many of which have significantly
greater resources than the Company. The Company also has no direct control over
changes in governmental regulation of mining activities, the speculative nature
of mineral exploration and development, operating hazards, fluctuating metals
prices and inflation and other economic conditions.
Legal challenges could prevent The Company from ever
developing Rock Creek.
The Companys proposed development of Rock Creek has been
challenged by several regional and national conservation groups at various times
since the United States Forest Service issued its initial Record of Decision in
2003 approving the Companys plan of operation. Some of these challenges have
alleged violations of a variety of federal and state laws and regulations
pertaining to the Companys permitting activities at Rock Creek, including the
Endangered Species Act, the National Environmental Policy Act, the 1872 Mining
Law, the Federal Land Policy Management Act, the Wilderness Act, the National
Forest Management Act, the Clean Water Act, the Clean Air Act, the Forest
Service Organic Act of 1897, and the Administrative Procedural Act. Although the
Company has successfully addressed most all of these challenges, The Company was
directed by the Montana Federal District Court in May 2010 to produce a
Supplemental Environmental Impact Statement (SEIS) to address National
Environmental Policy Act procedural deficiencies that were identified by the court. The
Company cannot predict with any degree of certainty how possible future
challenges will be resolved. Rock Creek is potentially the more significant of
the Companys two mining assets. New court challenges to the SEIS and a revised
Record of Decision may delay the Company from proceeding with its planned
development at Rock Creek. If the Company is successful in completing the SEIS
and defending any challenges, it still must comply with a number of requirements
and conditions as development progresses, failing which it could be denied the
ability to continue with its proposed activities.
21
The Companys reclamation liability at Troy could be
substantial.
The Companys financial obligations to reclaim, restore and
close Troy are presently covered by a $12.9 million surety bond, which includes
$6.5 million in a restricted cash account. In late 2012, Montana Department of
Environmental Quality and the U.S. Forest Service issued a new Environmental
Impact Statement and Record of Decision pertaining to the Troy reclamation. The
Company does not presently know whether the revised reclamation plan will
increase its bonding costs. Laws governing the closure of mining operations in
Montana have become more stringent since Troy was first placed into production.
These factors could result in the imposition of a higher performance bond. the
Companys reclamation liability for Troy is not limited by the amount of the
performance bond itself; the bond serves only as security for the payment of
these obligations. The Company would necessarily have to pay for any substantial
increase in actual costs over and above the maximum allowed under the bond.
The Company presently does not have the financial
resources to complete the construction of the new decline at Troy mine or to
develop Rock Creek.
The Company presently does not have sufficient funds to
complete the construction of a new decline to the North C Bed and deeper I Bed
areas at Troy. The Company also does not have sufficient cash to develop a mine
or begin mining operations at Rock Creek should it prove feasible to do so.
The Rock Creek mineral resources are not equivalent to
reserves.
Although The Company believes the mineral resources at Rock
Creek are significant, it does not mean they can be economically mined. A
mineral resource is not equivalent to proven reserves or probable reserves
under standards promulgated by the Securities and Exchange Commission (SEC),
principally because of the absence of sufficient quantifiable data. The Company
will not be able to determine whether Rock Creek contains a commercially
mineable ore body until its evaluation program has been completed and it has
obtained a final, economic and technical feasibility study that will include an
analysis of the amount of ore that can be economically produced under
then-prevailing market conditions. Similarly, the Company will not be able to
determine whether the supplemental mineral resources at Troy can be commercially
mined without further exploration and study. Stockholders are cautioned not to
assume that mineral resources will ever be converted into proven reserves or
probable reserves.
Future accounting changes
In May 2014, the Financial Accounting Standards Board (FASB)
issued Accounting Standards Update No. 2014-09, Revenue from Contracts with
Customers (ASU 2014-09), which supersedes nearly all existing revenue
recognition guidance under U.S. GAAP. The core principle of ASU 2014-09 is to
recognize revenues when promised goods or services are transferred to customers in an amount that reflects the
consideration to which an entity expects to receive for those goods or services.
ASU 2014-09 defines a five step process to achieve this core principle and, in
doing so, more judgment and estimates may be required within the revenue
recognition process than are required under existing U.S. GAAP.
22
The standard is effective for annual periods beginning after
December 15, 2016, and interim periods therein, using either of the following
transition methods: (i) a full retrospective approach reflecting the application
of the standard in each prior reporting period with the option to elect certain
practical expedients, or (ii) a retrospective approach with the cumulative
effect of initially adopting ASU 2014-09 recognized at the date of adoption
(which includes additional footnote disclosures). We are currently evaluating
the impact of our pending adoption of ASU 2014-09 on our consolidated financial
statements and have not yet determined the method by which we will adopt the
standard in 2017.
In August 2014, the FASB issued ASU 2014-15, Disclosure of
Uncertainties about an Entitys Ability to Continue as a Going Concern. ASU
2014-15 introduces an explicit requirement for management to assess and provide
certain disclosures if there is substantial doubt about an entitys ability to
continue as a going concern. ASU 2014-15 is effective for the annual period
ending after December 15, 2016. Early adoption is permitted. The Company expects
to adopt this guidance when effective, and upon adoption, will evaluate going
concern based on this guidance.
Financial Instruments, Hedging Activities and Other
Instruments
The Companys largest exposure to market risk is changes in the
prices of copper and silver. Changes in price have a significant effect on
revenue, cash flow and the value of concentrate receivables or payables, largely
because a significant portion of the Companys sales are subject to a future
pricing mechanism and changes in these metals prices affect both revenue and the
value of concentrate receivables or payables. The Company does have a hedging
policy which permits it to fix the sales price of copper and silver in
concentrate to be produced in the future or for which concentrate has been sold
and for which final settlement has not occurred.
For financial statement purposes, the Company records at fair
value the amount of silver and copper in concentrate sold to its customer for
which final prices have not yet been determined. At each month-end, the Company
adjusts its revenue to account for expected future prices and the corresponding
expected future revenue and cash flow. In order to do this, the Company must
make estimates of the future prices expected to prevail when final settlement
occurs. The Company uses published forward prices for the period of expected
settlement to estimate these expected prices.
As at March 31, 2015, the Company had no contracts outstanding
to sell silver or copper
Forward Looking Statements
Cautionary Safe Harbor Statement under the Private
Securities Litigation Reform Act of 1995. With the exception of historical
matters, the matters discussed in this report are forward- looking statements
that involve risk and uncertainties that could cause actual results to differ
materially from projections or estimates contained herein. The words believe,
estimate, anticipate, expect, and project and similar expressions are
included to identify forward-looking statements. Such forward looking-statements
include statements regarding future production levels and operating costs at Troy, future levels of capital
expenditures at both Troy and Rock Creek, the reserve and resource estimates at
both Troy and Rock Creek, the adequacy of the financial resources and funds to
cover operating and exploration costs at Troy and the cost of exploration at
Rock Creek, the timing of certain litigation activities which have delayed
exploration activities at Rock Creek, the adequacy of third party financing to
complete certain corporate development activities, and the expectation that Troy
will be able to generate positive cash flow in future periods. Factors that
could cause actual results to differ materially from these forward looking
statements include, among others:
23
- changes in copper and silver prices;
- the operating performance of the Troy mine;
- geological conditions at the Troy mine;
- the need for copper concentrate by copper smelters and the costs
associated with selling such concentrate to the smelters;
- the ability of the Company to complete exploration activities at the Rock
Creek project;
- activities of certain environmental groups opposed to the Companys
activities in the United States;
- changes in the planned Rock Creek project parameters;
- changes in estimates of the reserves and resources at all the properties
owned or controlled by the Company;
- economic and market conditions;
- future financial needs and the Companys ability to secure such financing
under reasonable terms and conditions;
- changes in federal or state legislation and regulations governing our
operations and projects; and
- risks of future unknown lawsuits respecting future planned activities on
our projects or past activities by the Company.
Other factors that could cause the Companys actual results to
differ materially are described in our Annual Report on Form 10-K for the year
ended December 31, 2014 and in other regulatory filings with the SEC and
Canadian provincial securities regulatory bodies, which are available in the
United States on the SECs website at www.sec.gov and in Canada at
www.sedar.com. Future events and actual results could differ materially from
those set forth in, contemplated by, or underlying the forward-looking
statements. Most of these factors are beyond our ability to predict or control.
Future events and actual results could differ materially from those set forth
in, contemplated by, or underlying the forward looking statements. Readers are
cautioned not to put undue reliance on forward looking statements.
Item 3. Quantitative and Qualitative Disclosures About
Market Risk
Our earnings and cash flow are significantly affected by
changes in the market price of copper and silver. The prices of both metals can
fluctuate widely and are influenced by numerous factors such as demand,
production levels, and world political and economic events and the strength of
the US dollar. During the past eighteen years the average annual price of copper
has ranged from a low of $0.71 per pound to a high of $4.48 per pound. Average
annual silver prices over this same period have ranged from a low of $3.95 per
ounce to a high of $41.96. Should the price of copper or silver decline
substantially, the value of Troy and Rock Creek could fall dramatically and the
future operation of Troy and the future exploration and development at Rock
Creek could both be at risk.
24
Item 4. Controls and Procedures
Management is responsible for adopting internal control that
gives it and the board of directors reasonable assurance that the Companys
consolidated financial statements present fairly its financial position and
results of operations. Management also is responsible for establishing and
maintaining disclosure controls and procedures that provide assurance that
material information concerning the Company, including its consolidated
subsidiaries, is appropriately disclosed.
Disclosure Controls and Procedures. Our
disclosure controls and procedures are designed to ensure that information we
are required to disclose in our periodic reports and other information filed
under the Securities Exchange Act of 1934 (the Exchange Act) is recorded,
processed, summarized and reported within the time periods prescribed by the
SECs rules. They include, without limitation, controls and procedures designed
to ensure that such information is accumulated and promptly communicated to our
management, including our chief executive officer and our chief financial
officer and other principal accounting officers, so such persons can make timely
decisions regarding disclosure.
We evaluated the effectiveness of the design and operation of
our disclosure controls and procedures as required by Rules 13(a)-15(e) and
15(d)-15(e) under the Exchange Act. This evaluation was performed under
the supervision and with the participation of our management, including our
chief executive officer and our chief financial officer, both of whom concluded
that such controls and procedures were effective as of March 31, 2015. Based
upon this evaluation, our chief executive officer and chief financial officer
concluded that the design and operation of the Companys disclosure controls and
procedures were effective as at March 31, 2015 to ensure that information
required to be disclosed by us in reports that we file under the Exchange
Act, is gathered, reported, processed, summarized and reported within the
time periods specified in the Securities and Exchange Commissions rules and
forms and is accumulated and communicated to management, including the chief
executive officer and the chief financial officer, to allow timely decisions
regarding required disclosure as specified under U.S. and Canadian securities
laws.
Changes in Internal Control over Financial Reporting.
There have been no changes in the Companys internal control over financial
reporting during the most recent fiscal quarter that have materially affected,
or are reasonably likely to affect, its internal control over financial
reporting.
PART II: Other Information
Item 1: Legal Proceedings
The Company, members of its board of directors, Hecla and
Heclas wholly-owned merger subsidiary, RHL Holdings, Inc. are defendants in
three putative stockholder class action lawsuits in Spokane County, Washington
Superior Court brought by purported stockholders of the Company in April 2014
following the Companys announcement of its proposed merger with Hecla.
The plaintiffs generally allege that (i) the members of the
Companys board of directors breached their fiduciary duties to the Companys
stockholders by authorizing the merger with Hecla for what the plaintiffs assert
is inadequate consideration arrived at pursuant to an inadequate process, and
(ii) Hecla and RHL Holdings, Inc. (and the Company in at least one of the
lawsuits) aided and abetted the other defendants alleged breach of these
fiduciary duties. The plaintiffs seek, among other things, to enjoin the merger,
rescind the transaction or obtain rescissory damages if the merger is consummated, obtain other unspecified damages,
and recover their attorneys fees and costs.
25
Although it is not possible to predict the outcome of
litigation matters with certainty, each of the Company, its directors, Hecla and
RHL Holdings, Inc. believe the lawsuits are without merit, and the parties
intend to vigorously defend against all claims asserted.
Item 2: Unregistered sales of equity securities and Use of
proceeds
Not Applicable
Item 3: Defaults Upon Senior Securities
Not Applicable
Item 4: Mine Safety Disclosure
Our operations at Troy are subject to health, safety and other
standards imposed under the federal Mine Safety and Health Act of 1977 (FMSHA)
and regulations promulgated thereunder. FMSHA is administered by the Mine Safety
and Health Administration (MSHA).
During the three months ended March 31, 2015, MSHA issued one
citation pursuant to Section 104 of FMSHA for violations of mandatory health or
safety standards that could, in the agencys opinion, significantly and
substantially contribute to mine safety or health hazard. MSHA proposed only
nominal penalties for these violations.
There were no mining fatalities at Troy during the three months
ended March 31, 2015, nor did MSHA issue written notice pursuant to Section
104(e) of FMSHA during the period alleging any pattern of violations of
mandatory health or safety standards or the potential for such a pattern. MSHA
did not deem the cited violations to be flagrant within the meaning of Section
110(b)(2) of FMSHA.
There are two pending appeals before the Federal Mine Health
Safety Review Commission challenging MSHAs assessment of proposed penalties
against us. The following table sets forth relevant information concerning the
statutory basis for these violations:
Mine Name Mine ID
|
Section
104 S&S Citations
|
Section
104(b) Orders
|
Section
104(d) Citations and
Orders
|
Section
110(b)(2) Violations
|
Section
107(a) Orders
|
Total
Dollar Value of MSHA
Assessme nts Proposed
|
Total
Number of Mining Related
Fatalities
|
Received
Notice of Pattern of
Violation s Under Section 104(e) |
Received
Notice of Potential to Have
Pattern Under Section 104(e) |
Legal
Actions Pending as of Last
Day of the Period |
Legal
Actions Initiated During
Period
|
Legal
Actions Resolved During
Period
|
Troy Mine, Inc. 24- 01467 |
1
|
0
|
0
|
0
|
0
|
$0.00
|
0
|
No
|
No
|
2
|
0
|
0
|
Item 5: Other Information
Not Applicable
26
Item 6: Exhibits
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
REVETT MINING COMPANY, INC. |
|
|
|
|
Date: May 5, 2015 |
By: /s/John Shanahan |
|
John Shanahan |
|
President and Chief Executive Officer |
|
|
|
|
Date: May 5, 2015 |
By: /s/ Ken Eickerman |
|
Ken Eickerman |
|
Chief Financial Officer |
28
EXHIBIT 31.1
CERTIFICATION
I, John Shanahan, certify that:
|
1. |
I have reviewed this form 10-Q of Revett Mining Company,
Inc. (the registrant); |
|
|
|
|
2. |
Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report; |
|
|
|
|
3. |
Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report; |
|
|
|
|
4. |
The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) for
the registrant and internal control over financial reporting as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and
have: |
|
a) |
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
|
|
b) |
Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
|
|
c) |
Evaluated the effectiveness of the registrants
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
|
d) |
Disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the
registrants most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
|
5. |
The registrants other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the
equivalent functions): |
|
a) |
All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant ability to
record, process, summarize and report financial information; and |
|
|
|
|
b) |
Any fraud, whether or not material, that involved
management or other employees who have a significant role in the
registrants internal control over financial
reporting. |
Date: May 5, 2015 |
|
|
|
/s/John Shanahan |
|
|
|
John Shanahan |
|
President and Chief Executive Officer |
|
EXHIBIT 31.2
CERTIFICATION
I, Ken Eickerman, certify that:
|
1. |
I have reviewed this form 10-Q of Revett Mining Company,
Inc. (the registrant); |
|
|
|
|
2. |
Based on my knowledge, this report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by this report; |
|
|
|
|
3. |
Based on my knowledge, the financial statements, and
other financial information included in this report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
report; |
|
|
|
|
4. |
The registrants other certifying officer and I are
responsible for establishing and maintaining disclosure controls and
procedures as defined in Exchange Act Rules 13a- 15(e) and 15d-15(e)) for
the registrant and internal control over financial reporting as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f) for the registrant and
have: |
|
a. |
Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our
supervision, to ensure that material information relating to the
registrant, including its consolidated subsidiaries, is made known to us
by others within those entities, particularly during the period in which
this report is being prepared; |
|
|
|
|
b. |
Designed such internal control over financial reporting,
or caused such internal control over financial reporting to be designed
under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted
accounting principles; |
|
|
|
|
c. |
Evaluated the effectiveness of the registrants
disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on
such evaluation; and |
|
|
|
|
d. |
Disclosed in this report any change in the registrants
internal control over financial reporting that occurred during the
registrants most recent fiscal quarter that has materially affected, or
is reasonably likely to materially affect, the registrants internal
control over financial reporting; and |
|
5. |
The registrants other certifying officer and I have
disclosed, based on our most recent evaluation of internal control over
financial reporting, to the registrants auditors and the audit committee
of the registrants board of directors (or persons performing the
equivalent functions): |
|
a. |
All significant deficiencies and material weaknesses in
the design or operation of internal control over financial reporting which
are reasonably likely to adversely affect the registrant ability to
record, process, summarize and report financial information; and |
|
|
|
|
b. |
Any fraud, whether or not material, that involved
management or other employees who have a significant role in the
registrants internal control over financial
reporting. |
Date: May 5, 2015 |
|
|
|
/s/Ken Eickerman |
|
|
|
Ken Eickerman |
|
Chief Financial Officer |
|
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly
Report of Revett Mining Company, Inc. (the Company) on Form 10-Q for the
period ended March 31, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the Report), each of the undersigned hereby
certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the Report
fairly presents, in all material respects, the financial condition and result of
operations of the Company.
/s/ John Shanahan
|
|
John Shanahan |
|
President and Chief Executive Officer |
|
Date: May 5, 2015 |
|
A signed original of this written statement required by Section
906 has been provided to Revett Mining Company, Inc. and will be retained by
Revett Mining Company, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly
Report of Revett Mining Company, Inc. (the Company) on Form 10-Q for the
period ended March 31, 2015, as filed with the Securities and Exchange
Commission on the date hereof (the Report), each of the undersigned hereby
certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the
Sarbanes-Oxley Act of 2002, that:
(1) The Report fully complies with the
requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) The information contained in the
Report fairly presents, in all material respects, the financial condition and
result of operations of the Company.
/s/ Ken Eickerman
|
|
Ken Eickerman |
|
Chief Financial Officer |
|
Date: May 5, 2015 |
|
A signed original of this written statement required by Section
906 has been provided to Revett Mining Company, Inc. and will be retained by
Revett Mining Company, Inc. and furnished to the Securities and Exchange
Commission or its staff upon request.
Revett Mining Company, Inc. (AMEX:RVM)
過去 株価チャート
から 5 2024 まで 6 2024
Revett Mining Company, Inc. (AMEX:RVM)
過去 株価チャート
から 6 2023 まで 6 2024