U.S. Antimony (UAMY) Announces Plan to Discontinue Latin America Operational Activities
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Insights
The cessation of U.S. Antimony's operations in Latin America represents a strategic shift in the company's business model, driven by the necessity to curb persistent negative cash flows from its USAMSA subsidiary. The financial implications of this decision are multifaceted. Initially, there will likely be one-time charges associated with the shutdown, including severance, asset impairment and potential costs related to the sale or lease of assets. However, the long-term financial health of the company may benefit from reduced operational drag and a renewed focus on profitable segments.
Investors should note the company's intention to enhance its operations in North America, particularly in Thompson Falls, Montana, which is currently profitable. This pivot towards domestic production is in line with the U.S. government's focus on securing critical minerals domestically, which could lead to financial incentives for U.S. Antimony. The company's exploration efforts in Alaska and Canada, coupled with potential government support, indicate a proactive approach to securing future antimony supplies. This realignment may be viewed positively by the market, reflecting a strategic focus on core competencies and profitability.
Nevertheless, the market will be closely monitoring the company's ability to manage the costs of exiting Latin America and the efficacy of its efforts to capitalize on domestic antimony production. The overall impact on the stock will depend on the company's success in navigating these transitions and the actual financial performance of its remaining operations.
From a market perspective, U.S. Antimony's decision to discontinue its Latin American operations could signal a broader industry trend where companies are reassessing their global footprint in light of geopolitical risks, regulatory challenges and operational inefficiencies. The company's challenges in Mexico, such as stringent mining laws, cartel-related safety concerns and difficulties in tax collection, highlight the risk factors associated with international operations that can affect a company's bottom line.
The strategic shift to focus on domestic sources and the search for new deposits in Alaska and Canada may resonate well with stakeholders concerned about supply chain security and sustainability. This move aligns with the current emphasis on domestic mineral independence and could position U.S. Antimony favorably within the market. The company's status as the only operating antimony processing facility in the United States may offer a competitive advantage, potentially attracting government support and partnerships.
Market participants will likely assess the company's strategic realignment within the context of the broader critical minerals market, evaluating the potential for U.S. Antimony to meet domestic demand and benefit from government initiatives aimed at bolstering national production capabilities.
The economic rationale behind U.S. Antimony's operational shift is grounded in the principle of comparative advantage. By consolidating its operations to the more profitable Thompson Falls facility and seeking new antimony sources in geopolitically stable regions, the company is aiming to optimize its economic efficiency. The anticipated improvement in cash flow from the discontinuation of unprofitable segments could allow for a reallocation of resources towards more promising ventures, such as the exploration of new antimony deposits.
The economic impact of this decision extends beyond the company's balance sheet. It reflects a broader economic narrative where businesses are increasingly prioritizing operational efficiency and supply chain resilience. The focus on critical minerals like antimony, which are essential for national defense and energy sectors, underscores the strategic importance of these commodities in the national economy. U.S. Antimony's alignment with governmental priorities may facilitate access to financial support, fostering an economic environment conducive to growth in this sector.
However, the transition also carries economic risks, including the potential for unforeseen costs associated with the shutdown and the uncertainty in securing new antimony sources. The company's economic outlook will be closely tied to its ability to mitigate these risks and capitalize on the opportunities presented by the evolving critical minerals landscape.
THOMPSON FALLS, MT / ACCESSWIRE / March 11, 2024 / United States Antimony Corporation ("USAC" or "U.S. Antimony" or the "Company"), (NYSE:UAMY) announces plan to discontinue all Latin America operational activities and dispose of its US Antimony de Mexico, S.A. de C.V. ("USAMSA") subsidiary, effective immediately.
This primarily includes the Company's Madero smelter facility in Parras de la Fuente Coahuila and its Puerto Blanco mining facility in San Luis de la Paz Guanajuato. This decision was made after a detailed, in-depth review into the historical financial performance of these assets and due to USAMSA's negative cash flow cumulatively since inception, which goes back many years, as well as the lack of any potential to generate positive cash flow in the foreseeable future. The Company also believes that the cash flow of its remaining antimony business located in Thompson Falls, Montana will be significantly improved after the closure and disposal of its USAMSA subsidiary. Therefore, the Company will shut down the operations of USAMSA on March 11, 2024, and terminate a majority of USAMSA employees. The Company intends to possibly sell or lease its USAMSA entity, operations, or assets over the next year and has initiated an active search for buyers or leasing opportunities of its operations and/or existing assets. At this time, the Company is unable to estimate the total amount or range of amounts to be incurred in connection with these actions or the total amount or range of amounts of the charge that will ultimately result in future cash expenditures.
USAC will continue to hold its existing Los Juarez mining claims and concessions in Cadereyta de Montes Queretaro, which are included in its Antimonio De Mexico, S.A. De C.V. ("ADM") subsidiary. There are presently no active operations at Los Juarez, but the company believes there is significant exploration potential.
Commenting on the closure of operations in Latin America, Mr. Gary C. Evans, Chairman and Co-CEO of U.S. Antimony stated, "Based upon a thorough review of historical financial numbers of our Mexican operations, which was only possible after retention of a new CFO mid-year 2023, it became painfully obvious that these operations have always been unprofitable. One cannot incur costs to mine and process raw material above the cost of selling the actual product. This is simple math and economics 101. Then, when you combine this fact with operating in a foreign country, new stringent Mexican mining laws and regulations, cartels disrupting operations and raising safety concerns, our inability to collect monies due to us from the Mexican government regarding taxes (in excess of one million U.S. Dollars) and locations of our mines and processing facilities being spread out across the country, both the economic and operational challenges were simply too great. However, by no means are we abandoning antimony as a principal product of our Company. Antimony continues to be a "Critical Mineral" on the U.S. Government's Defense and Energy lists of needs. Our existing operation in Thompson Falls is profitable and continues to operate efficiently. The raw source material for this operation presently comes from Canada. Your board and management team are sourcing new antimony deposits both in Alaska and Canada. Additionally, we are working with various departments of the U.S. Government on possible grants and loans to assist us in this endeavor. As the only operating antimony processing facility in the United States, including Alaska, we have been receiving significant attention of late from Washington D.C. with our recent marketing efforts."
About USAC:
United States Antimony Corporation and its subsidiaries in the U.S. and Mexico ("USAC" or "U.S. Antimony" or the "Company", "we", "us", and "our") sell processed antimony, precious metals, and zeolite products in the U.S. and abroad. The Company processes antimony ore primarily into antimony oxide, antimony metal, and antimony trisulfide. Our antimony oxide is used to form a flame-retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings and paper, as a color fastener in paint, and as a phosphorescent agent in fluorescent light bulbs. Our antimony metal is used in bearings, storage batteries, and ordnance. Our antimony trisulfide is used as a primer in ammunition. In its operations in Idaho, the Company mines and processes zeolite, a group of industrial minerals used in soil amendment and fertilizer, water filtration, sewage treatment, nuclear waste and other environmental cleanup, odor control, gas separation, animal nutrition, and other miscellaneous applications.
Forward-Looking Statements:
Readers should note that, in addition to the historical information contained herein, this press release may contain forward-looking statements within the meaning of, and intended to be covered by, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based upon current expectations and beliefs concerning future developments and their potential effects on the Company including matters related to the Company's operations, pending contracts and future revenues, financial performance, and profitability, ability to execute on its increased production and installation schedules for planned capital expenditures, and the size of forecasted deposits. Although the Company believes that the expectations reflected in the forward-looking statements and the assumptions upon which they are based are reasonable, it can give no assurance that such expectations and assumptions will prove to have been correct. The reader is cautioned not to put undue reliance on these forward-looking statements, as these statements are subject to numerous factors and uncertainties. In addition, other factors that could cause actual results to differ materially are discussed in the Company's most recent filings, including Form 10-K and Form 10-Q with the Securities and Exchange Commission.
Forward-looking statements are typically identified by words such as "believe," "expect," "anticipate," "intend," "outlook," "estimate," "forecast," "project," "pro forma" and other similar words and expressions. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Forward-looking statements speak only as of the date they are made. Because forward-looking statements are subject to assumptions and uncertainties, actual results or future events could differ, possibly materially, from those anticipated in the forward-looking statements and future results could differ materially from historical performance.
Contact:
United States Antimony Corporation
PO Box 643
47 Cox Gulch Rd.
Thompson Falls, Montana 59873-0643
406-606-4117
E-Mail: info@usantimony.com
SOURCE: United States Antimony Corp.
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FAQ
Why is United States Antimony Corporation discontinuing its Latin America operational activities?
What facilities are included in the discontinued operational activities in Latin America?
When will the operations of US Antimony de Mexico be shut down?
What will happen to the employees of US Antimony de Mexico?
What is the Company's plan for its USAMSA entity, operations, or assets?
