RISK MANAGEMENT

The Company is party to an Interest Rate Cap
agreement with a major financial institution covering a notional amount of $350,000 to limit the floating interest rate exposure
associated with the 2017 Term Loan. The Interest Rate Cap agreement contains no leverage features and has a cap rate of 2.605%
through the termination date of December 31, 2020. Additionally, the Company is party to an Interest Rate Swap agreement with a
major financial institution covering the entire currently outstanding notional amount of the Sinosure Credit Facility. The Interest
Rate Swap agreement contains no leverage features and has a fixed rate of 2.99% through the termination date of March 21, 2022.Currency and exchange rate risk The shipping industry’s functional currency
is the U.S. dollar. All of the Company’s revenues and most of its operating costs are in U.S. dollars. The Company incurs
certain operating expenses, such as vessel and general and administrative expenses, in currencies other than the U.S. Dollar, and
the foreign exchange risk associated with these operating expenses is immaterial. If foreign exchange risk becomes material in
the future, the Company may seek to reduce its exposure to fluctuations in foreign exchange rates through the use of short-term
currency forward contracts and through the purchase of bulk quantities of currencies at rates that management considers favorable.
For contracts which qualify as cash flow hedges for accounting purposes, hedge effectiveness would be assessed based on changes
in foreign exchange spot rates with the change in fair value of the effective portions being recorded in accumulated other comprehensive
loss.Fuel price volatility risk Historically, the Company managed its exposure
to future increases in fuel prices in the normal course of its business by entering into standalone bunker swaps. The Company’s
deployment of most of its conventional tanker fleet in commercial pools and time charters currently limits the Company’s
direct exposure to fluctuations in fuel prices as a component of voyage expenses. As discussed in Item 1, “Business — Overview
and Recent Developments,” there is considerable uncertainty about the impact that the low-sulfur fuel oil requirements of
the IMO 2020 Regulations set to take effect on January 1, 2020 will have on fuel prices, particularly the forecasted spread between
HFO and low-sulfur fuel between 2020 and 2023. In addition to the Company’s current plans to install scrubbers on certain
vessels in its fleet, significant consideration will also be given to other ways of managing the risk of volatility in the price
spread between HFO and low-sulfur fuel as well as the risk of limited supply of compliant fuel along the routes that the Company’s
vessels typically travel.

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INTEREST RATE SENSITIVITY

(1)Includes amounts outstanding under the Sinosure Credit Facility as floating rate debt estimated based
on (i) the fixed rate stated in the related floating-to-fixed interest rate swap through the swap maturity date of March 21, 2022,
or (ii) the effective three-month LIBOR rate for periods after the swap maturity date, plus the applicable margin for the Sinosure
Credit Facility of 2.00%.


INTEREST RATE SENSITIVITY

As of December 31, 2018, the Company had secured
term loans (the 2017 Term Loan Facility, the Sinosure Credit Facility, and the ABN Term Loan Facility) and a revolving credit facility
(2017 Revolver Facility) under which borrowings bear interest at a rate based on LIBOR, plus the applicable margin, as stated in
the respective loan agreements. As discussed in Interest Rate Risk section above, the Company entered into an Interest Rate Cap
agreement for 2017 Term Loan and an Interest Rate Swap agreement for Sinosure Credit Facility to limit the floating interest rate
exposure associated with the debt facilities. There was no outstanding balance under the 2017 Revolver Facility as of December
31, 2018.

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CRITICAL ACCOUNTING POLICIES

As the Company’s performance obligations
are services which are received and consumed by its customers as it performs such services, revenues are recognized over time proportionate
to the days elapsed since the service commencement compared to the total days anticipated to complete the service. The minimum
duration of services is less than one year for each of the Company’s current contracts.Demurrage earned during a voyage charter represents
variable consideration. The Company estimates demurrage at contract inception using either the expected value or most likely amount
approaches. Such estimate is reviewed and updated over the term of the voyage charter contract.The Company has elected the practical expedient
to expense costs to obtain a contract with a customer (e.g. broker commissions) as incurred rather than defer and amortize such
costs as the amortization period would be expected to be one year or less. Vessel Lives and Salvage ValuesThe carrying value of each of the Company’s
vessels represents its original cost at the time it was delivered or purchased less depreciation calculated using an estimated
useful life of 25 years (except for FSO service vessels for which estimated useful lives of 30 years are used and LNG Carriers
for which estimated useful lives of 35 years are used) from the date such vessel was originally delivered from the shipyard. A
vessel’s carrying value is reduced to its new cost basis (i.e. its current fair value) if a vessel impairment charge is recorded.If the estimated economic lives assigned to
the Company’s vessels prove to be too long because of new regulations, an extended period of weak markets, the broad imposition
of age restrictions by the Company’s customers, or other future events, it could result in higher depreciation expense and
impairment losses in future periods related to a reduction in the useful lives of any affected vessels. Company management estimates
the scrap value of all of its vessels to be $300 per lightweight ton. The Company’s assumptions used in the determination
of estimated salvage value take into account current scrap prices, the historic pattern of annual average scrap rates over the
five years ended December 31, 2018, which ranged from $235 to $495 per lightweight ton, estimated changes in future market demand
for scrap steel and estimated future demand for vessels. Scrap prices also fluctuate depending upon type of ship, bunkers on board,
spares on board and delivery range. Market conditions that could influence the volume and pricing of scrapping activity in 2019
and beyond include the combined impact of scheduled newbuild deliveries and charter rate expectations for vessels potentially facing
age restrictions imposed by oil majors as well as the impact of ballast water treatment systems regulatory requirements and IMO
2020 requirements for the use of low-sulfur fuels. These factors will influence owners’ decisions to accelerate the disposal
of older vessels, especially those with upcoming special surveys.Although management believes that the assumptions
used to determine the scrap rate for its vessels are reasonable and appropriate, such assumptions are highly subjective, in part,
because of the cyclicality of the nature of future demand for scrap steel.Vessel ImpairmentThe carrying values of the Company’s
vessels may not represent their fair market value or the amount that could be obtained by selling the vessel at any point in time
since the market prices of second-hand vessels tend to fluctuate with changes in charter rates and the cost of newbuildings. Historically,
both charter rates and vessel values tend to be cyclical. Management evaluates the carrying amounts of vessels held and used by
the Company for impairment only when it determines that it will sell a vessel or when events or changes in circumstances occur
that cause management to believe that future cash flows for any individual vessel will be less than its carrying value. In such
instances, an impairment charge would be recognized if the estimate of the undiscounted future cash flows expected to result from
the use of the vessel and its eventual disposition is less than the vessel’s carrying amount. This assessment is made at
the individual vessel level as separately identifiable cash flow information for each vessel is available.In developing estimates of future cash flows,
the Company must make assumptions about future performance, with significant assumptions being related to charter rates, ship operating
expenses, utilization, drydocking requirements, residual value and the estimated remaining useful lives of the vessels. These assumptions
are based on historical trends as well as future expectations. Specifically, in estimating future charter rates, management takes
into consideration rates currently in effect for existing time charters and estimated daily time charter equivalent rates for each
vessel class for the unfixed days over the estimated remaining lives of each of the vessels. The estimated daily time charter equivalent
rates used for unfixed days are based on a combination of (i) internally forecasted rates that are consistent with forecasts provided
to the Company’s senior management and Board of Directors, and (ii) the trailing 12-year historical average rates, based
on monthly average rates published by a third party maritime research service. The internally forecasted rates are based on management’s
evaluation of current economic data and trends in the shipping and oil and gas industries. Management uses the published 12-year
historical average rates in its assumptions because it is management’s belief that the 12-year period captures a distribution
of strong and weak charter rate periods, which results in the use of an average mid-cycle rate that is more in line with management’s
forecast of a return to mid-cycle charter rate levels in the medium term. Recognizing that the transportation of crude oil and
petroleum products is cyclical and subject to significant volatility based on factors beyond the Company’s control, management
believes the use of estimates based on the combination of internally forecasted rates and 12-year historical average rates calculated
as of the reporting date to be reasonable.

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CRITICAL ACCOUNTING POLICIES

Estimated outflows for operating expenses
and drydocking requirements are based on historical and budgeted costs and are adjusted for assumed inflation. Utilization is based
on historical levels achieved and estimates of a residual value for recyclings are based upon published 12-year historical data
or the pattern of scrap rates used in management’s evaluation of salvage value for purposes of recording depreciation. Finally,
for vessels that are being considered for disposal before the end of their respective useful lives, the Company utilizes weighted
probabilities assigned to the possible outcomes for such vessels being sold or scraped before the end of their respective useful
lives.The determination of fair value is highly
judgmental. In estimating the fair value of INSW’s vessels for purposes of Step 2 of the impairment tests, the Company considers
the market and income approaches by using a combination of third party appraisals and discounted cash flow models prepared by the
Company. In preparing the discounted cash flow models, the Company uses a methodology consistent with the methodology discussed
above in relation to the undiscounted cash flow models prepared by the Company and discounts the cash flows using its current estimate
of INSW’s weighted average cost of capital.The more significant factors that could impact
management’s assumptions regarding time charter equivalent rates include (i) loss or reduction in business from significant
customers, (ii) unanticipated changes in demand for transportation of crude oil and petroleum products, (iii) changes in production
of or demand for oil and petroleum products, generally or in particular regions, (iv) greater than anticipated levels of tanker
newbuilding orders or lower than anticipated levels of tanker scrappings, and (v) changes in rules and regulations applicable to
the tanker industry, including legislation adopted by international organizations such as IMO and the EU or by individual countries.
Although management believes that the assumptions used to evaluate potential impairment are reasonable and appropriate at the time
they were made, such assumptions are highly subjective and likely to change, possibly materially, in the future.2018 Impairment Evaluation — Management
gave consideration on a quarterly basis to the following events and changes in circumstances in determining whether there were
any indicators that the carrying amounts of the vessels in the Company’s fleet were not recoverable. Factors considered included
declines in valuations during 2018 for vessels of certain sizes and ages, any negative changes in forecasted near term charter
rates, and an increase in the likelihood that the Company will sell certain of its vessels before the end of their estimated useful
lives in conjunction with the Company’s fleet renewal program. The Company concluded that the increased likelihood of disposal
prior to the end of their respective useful lives constituted impairment triggering events for one Panamax and two Aframaxes that
were being actively marketed for sale as of June 30, 2018; one VLCC that was held-for-sale as of September 30, 2018; and as of
December 31, 2018, one MR that has an increased likelihood of disposal prior to the end of its useful life.In developing estimates of undiscounted future
cash flows for performing Step 1 of the impairment tests as of June 30, 2018, the Company utilized weighted probabilities assigned
to possible outcomes for each of the three vessels for which impairment trigger events were determined to exist. The Company entered
into a memorandum of agreement for the sale of the Panamax vessel in early July 2018. Accordingly, a 100% probability was attributed
to the vessel being sold before the end of its useful life. As the Company is considering selling the other two vessels as a part
of its fleet renewal program, 50% probabilities were assigned to the possibility that the two Aframax vessels would be sold prior
to the end of their respective useful lives. In estimating the fair value of the vessels for the purposes of Step 2 of the impairment
tests, the Company considered the market approach by using the sales price per the memorandum of agreement. Based on the tests
performed, the sum of the undiscounted cash flows for each of the two Aframax vessels was more than its carrying value as of June
30, 2018 and the sum of the undiscounted cash flows for the Panamax vessel was less than its carrying value as of June 30, 2018.
Accordingly, an impairment charge totaling $948 was recorded for the Panamax vessel to write-down its carrying value to its estimated
fair value at June 30, 2018.Held-for-sale impairment charges aggregating
$16,419 were recorded during the third quarter of 2018 including (i) a charge of $14,226 to write the value of the VLCC held-for-sale
at September 30, 2018 down to its estimated fair value; (ii) a charge of $361 for estimated costs to sell the vessel; and (iii)
a charge of $1,832 for the write-off of other assets associated with the operations of the vessel. The amount of the charge to
write down the vessel to its fair value was determined using the market approach by utilizing the sales price as per the memorandum
of agreement associated with the sale of the vessel.In developing estimates of undiscounted future
cash flows for performing Step 1 of the impairment test as of December 31, 2018, the Company utilized weighted probabilities assigned
to possible outcomes for the MR for which an impairment triggering event was determined to exist. As the Company is considering
selling the MR as a part of its fleet renewal program, a 50% probability was assigned to the possibility that the vessel will be
sold prior to the end of its useful life. In estimating the fair value of the vessel for the purposes of Step 2 of the impairment
test, the Company considered the market approach by utilizing a combination of third party appraisals and recently executed vessel
sale transactions. Based on the tests performed, the sum of the undiscounted cash flows for the vessel was less than its carrying
value as of December 31, 2018. Accordingly, an impairment charge totaling $1,670 was recorded to write-down the vessel’s
carrying value to its estimated fair value at December 31, 2018.

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CRITICAL ACCOUNTING POLICIES

2017 Impairment Evaluation — Management
gave consideration to the following events and changes in circumstances in determining whether there were any indicators that the
carrying amounts of the vessels in the Company’s fleet were not recoverable as of December 31, 2017. Factors considered included
declines in valuations during 2017 for vessels of certain sizes and ages, any negative changes in forecasted near term charter
rates, and an increase in the likelihood that the Company will sell certain of its vessels before the end of their estimated useful
lives in conjunction with the Company’s fleet renewal program. The Company concluded that the above indicators constituted
impairment trigger events for eighteen vessels (one ULCC, one VLCC, six Aframaxes, eight Panamaxes and two LR1s) as of December
31, 2017 and three vessels (one Panamax and two MRs) as of September 30, 2017.In developing estimates of undiscounted future
cash flows for performing Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the
fair value of the vessels for the purposes of Step 2 of the impairment tests, the Company considered the market and income approaches
by using a combination of third party appraisals, current recycling market data, and discounted cash flow models prepared by the
Company. In preparing the discounted cash flow models, the Company used a methodology consistent with the methodology described
above and a weighted average cost of capital discount rate of 9.5%. Based on the tests performed, impairment charges totaling $81,062
and $7,346 were recorded on twelve vessels (one ULCC, one VLCC, four Aframaxes and six Panamaxes) at December 31, 2017 and three
vessels (one Panamax and two MRs) as of September 30, 2017, respectively to write-down their carrying values to their estimated
fair values.2016 Impairment Evaluations —
The Company had been monitoring the industry wide decline in vessel valuations during 2016 and specifically from June 30, 2016
to September 30, 2016, and September 30, 2016 to December 31, 2016, as well as the decline in forecasted near term charter rates,
and concluded that the declines in vessel valuations and in forecasted near term charter rates constituted impairment trigger events
for 28 vessels as of September 30, 2016 and 24 vessels as of December 31, 2016. In developing estimates of undiscounted future
cash flows for performing Step 1 of the impairment tests, the Company utilized the methodology described above. In estimating the
fair value of the vessels for the purposes of Step 2 of the September 30, 2016 impairment tests, the Company developed fair value
estimates that utilized a market approach which considered an average of two vessel appraisals. Based on the tests performed, impairment
charges totaling $49,640 were recorded on two LR1s, an Aframax and a Panamax to write-down their carrying values to their estimated
fair values at September 30, 2016. In estimating the fair values of the vessels for the purposes of Step 2 of the December 31,
2016 impairment tests, the Company considered the market and income approaches by using a combination of third party appraisals
and discounted cash flow models prepared by the Company. In preparing the discounted cash flow models, the Company used a methodology
consistent with the methodology described above and a weighted average cost of capital discount rate of 9.0%. Based on the tests
performed, impairment charges aggregating $29,602 were recorded on one Panamax and seven MRs to write-down their carrying values
to their estimated fair values at December 31, 2016.Impairment of Equity Method InvestmentsWhen events and circumstances warrant, investments
accounted for under the equity method of accounting are evaluated for impairment. If a determination is made that an other-than-temporary
impairment exists, the investment should be written down to its fair value in accordance with ASC 820, Fair Value Measurements
and Disclosures, which establishes a new cost basis. There were no indicators of an other-than-temporary impairment of the
Company’s equity method investments as of December 31, 2018 and 2017, respectively.In December 2016, evidence of an other-than-temporary
decline in the fair value of the Company’s investments in its FSO Joint Venture below its carrying value was identified by
the Company. Specifically, management concluded that the lower charter rate expected over the duration of the then recently awarded
five-year service contracts commencing in the third quarter of 2017 was negative evidence indicating that the excess of the carrying
value of the Company’s investment in the FSO Joint Venture over its fair value was other-than-temporary as of December 31,
2016.As the Company determined that other-than-temporary
impairments existed in relation to its investment in the FSO Joint Venture, impairment charges aggregating $30,475 were recorded
to write down the investment to its estimated fair values as of December 31, 2016. Such charges are included in equity in income
of affiliated companies in the accompanying consolidated statements of operations. In estimating the fair value of the Company’s
investments in the FSO Joint Venture as of December 31, 2016, the Company utilized an income approach, by preparing discounted
cash flow models since there is a lack of comparable market transactions for the specially built assets held by the FSO Joint Venture.
In preparing the discounted cash flows models, the Company used a methodology largely consistent with the methodology and assumptions
detailed in the “Vessel Impairment” section above, with the exception being that as the assets owned by the FSO Joint
Venture serve under specific service contracts, the estimated charter rates for periods after the expiry of the existing contracts
are based upon management’s internally forecasted rates. The cash flows were discounted using the estimated weighted average
cost of capital for each joint venture, which approximated 9.5% and took into consideration country risk, entity size and uncertainty
with respect to the cash flows for periods beyond the current charter expiries.

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CRITICAL ACCOUNTING POLICIES

DrydockingWithin the shipping industry, there are two
methods that are used to account for dry dockings: (1) capitalize drydocking costs as incurred (deferral method) and amortize such
costs over the period to the next scheduled drydocking, and (2) expense drydocking costs as incurred. Since drydocking cycles typically
extend over two and a half years or five years, management uses the deferral method because management believes it provides a better
matching of revenues and expenses than the expense-as-incurred method. Pension BenefitsThe Company has obligations outstanding under
the OSG Ship Management (UK) Ltd. Retirement Benefits Plan (the “Scheme”), a defined benefit pension plan maintained
by a subsidiary in the U.K., who is the principal employer of the Scheme. The plan has been closed to new entrants and accrual
since December 2007. The Company has recorded pension benefit costs based on valuations developed by its actuarial consultants.
These valuations are based on key estimates and assumptions, including those related to the discount rates, the rates expected
to be earned on investments of plan assets and the life expectancy/mortality of plan participants. The Company is required to consider
market conditions in selecting a discount rate that is representative of the rates of return currently available on high-quality
fixed income investments. A higher discount rate would result in a lower benefit obligation and a lower rate would result in a
higher benefit obligation. The expected rate of return on plan assets is management’s best estimate of expected returns on
plan assets. A decrease in the expected rate of return will increase net periodic benefit costs and an increase in the expected
rate of return will decrease benefit costs. The mortality assumption is management’s best estimate of the expected duration
of future benefit payments at the measurement date. The estimate is based on the specific demographics and other relevant facts
and circumstances of the Scheme and considers all relevant information available at the measurement date. Longer life expectancies
would result in higher benefit obligations and a decrease in life expectancies would result in lower benefit obligations.In determining the benefit obligations at
the end of year measurement date, the Company continues to use an equivalent single weighted-average discount rate, at December
31, 2018 (2.80%) and 2017 (2.40%), respectively. Management believes these rates to be appropriate for ongoing plans with a long
duration such as Scheme. The Company also assumed a long-term rate of return on the Scheme assets of 4.46% and 3.85% at December
31, 2018 and 2017, respectively, based on the asset mix as of such dates and management’s estimate of the long-term rate
of return that could be achieved over the remaining duration of the Scheme.Newly Issued Accounting StandardsSee Note 2, “Summary of Significant
Accounting Policies,” to the Company’s consolidated financial statements set forth in Item 8, “Financial Statements
and Supplementary Data.”

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Precious Metals Sales

For the
years ended December 31, 2020 and 2019, the EBITDA for precious
metals was $174,079 and $194,239, respectively.

| Precious Metal Sales  Silver/Gold | For the Year Ended December 31, | |
| --- | --- | --- |
|  | 2020 | 2019 |
| Ounces Gold Shipped (Au) | 30.79 | 48.13 |
| Ounces Silver Shipped (Ag) | 11,434 | 11,714 |
| Revenues | $174,079 | $194,239 |


Precious Metals Sales

During
the period ending December 31, 2020, the most significant factors
affecting our financial performance were as follows:

●
The
death of John Lawrence, the Company’s previous President and
Chairman, which created the opportunity to renegotiate existing
supply and processing contracts,

●
The
continuing decline of antimony prices,

●
An
assessment against US Antimony from the Mexican tax authority (SAT)
in the amount of $1,120,730 regarding a lawsuit the Company had
been in involved in since 2016.

●
A
private placement of 5,742,858 shares of the Company’s common
stock sold in July of 2020.

●
A
50% decrease in Canadian supply of sodium antimonate.

●
The
consequences of the Covid-19 pandemic to antimony and zeolite sales
and corresponding increase costs of freight.

During the period ended December 31, 2019, the
most significant event affecting our financial performance was the
continued low price of antimony. This decrease in prices caused us
to re-evaluate our commitment to the two antimony mines we were
purchasing in Mexico. We made the decision that with the depressed
prices and the cost of developing the mines, it was in our
best interest to abandon these properties and look at re-acquiring
them in the future if antimony prices improved. It was decided that
our resources should be directed to completing our precious metals
facility at Puerto Blanco and starting precious metals production
in 2021. In connection with the low antimony prices, we negotiated
a lower cost agreement with our North American supplier which will
help us with future cash flow.
Our
plan for the remainder of 2021 is to process
approximately:

●
1,300
tons of mined rock from the Los Juarez property. 2,000 tons have
already been moved to the Puerto Blanco facility. It is estimated
that we have 10,000 tons of mined rock at the Los Juarez
property.

●
At
least 720 tons of ore from the Wadley mines at the Madero Smelting
facility.

●
300
tons of milled tailings at the Puerto Blanco facility.

●
60
tons of stibnite ore at Puerto Blanco facility for the generation
of concentrates specifically for the production of antimony
trisulfide for the Defense Logistic Agency (DLA).

In
addition to the processing goals stated above, US Antimony intends
to continue to improve its production capacity and sales of zeolite
at its subsidiary Bear River Zeolite (BRZ). Funds obtained in early
2021 from two public placements of stock will assist greatly to
this goal as well as the improvement of the facilities in Madero,
Thompson Falls, Puerto Blanco, and Los Juarez.
In
2020, we only received 50% of our expected supply from North
American sources. We anticipated increasing the raw material from
Mexico and the resumption of normal shipments from our North
American supplier in 2019, but these plans did not materialize due
to low overall metal prices and the low antimony prices in
particular.
In both
2020 and 2019, the Puerto Blanco mill circuits were utilized less
than 2% of their capacity, but with the completion of the cyanide
leach circuit we expect it to be fully utilized processing precious
metals ore from the Los Juarez mine. Some antimony will be realized
as a by-product of processing the Los Juarez ore. In 2020, US
Antimony has been involved in renegotiating its supply contract
with its North American source, that will likely result in a mutual
improvement in the supply contract. Additionally, the price of
antimony in early 2021 is double what it was in 2019.
The
estimated recovery of precious metals per metric ton, after the
caustic leach and cyanide leach circuits, is as follows at Los
Juarez:


Financial Condition and Liquidity

Our net
working capital increased for the year ended December 31, 2020 from
a negative amount of $2,695,926 at the beginning of the year to a
negative amount of $2,669,382 at the end of 2020. Current assets
increased due to an increase in cash and cash equivalents. Our
current liabilities increased by $501,862, which included a
decrease of approximately $584,000 in accounts payables and
payables to related parties, but an overall increase due to Mexican
export tax liability. Capital improvements were paid for with cash
and debt.
For the
year ending December 31, 2021, we are planning to use funds
acquired from the two stock offerings raised in Q1 2021 to make
significant improvements to our operations at Madero, Puerto
Blanco, Bear River Zeolite, and Thompson Falls facilities with the
goal of increasing production and decreasing costs.

| Financial Condition and Liquidity | 2020 | 2019 |
| --- | --- | --- |
|  |  |  |
| Current assets | $1,808,161 | $1,279,755 |
| Current liabilities | (4,477,543) | (3,975,681) |
| Net Working Capital | $(2,669,382) | $(2,695,926) |
|  |  |  |
|  |  |  |
|  | 2020 | 2019 |
| Cash provided (used) by operations | $(1,305,664) | $(11,355) |
| Cash provided (used) by investing: |  |  |
| Cash used for capital outlay | (243,091) | (792,925) |
| Proceeds from sale of land | - | 400,000 |
| Cash provided (used) by financing: |  |  |
| Proceeds from notes payable to bank, net of payments | (97,066) | 13,149 |
| Principal paid on long-term debt | (46,670) | (127,683) |
| Advances from related party | - | 237,400 |
| Payments on advances from related parties | (83,419) | (35,066) |
| Proceeds from CARES Act note payable | 443,400 |  |
| Stock issued for cash | 1,813,068 | 404,199 |
| Checks issued and payable | 69,052 | (28,849) |
| Net change in cash and restricted cash | $549,610 | $58,870 |


HIGHLIGHTS 2015

Precious Metal Sales


ANTIMONY MARKET

2.

The “Mexican excess production costs” include (1) holding costs for Los Juarez, Wadley, Soyatal, Guadalupe, and the Puerto Blanco mill, and (2) the write-down of significant concentrates and direct shipping ore (DSO) mined in 2013 and 2014 at Wadley, Soyatal, and other properties. These costs are included in our production costs and have a very severe impact on profitability. In 2015, they added $1,086,440 to the costs of the production of antimony. These costs amounted to $.98 per pound of antimony production in Mexico.

| Division | Operation | Description |  | Amount | |  |
| --- | --- | --- | --- | --- | --- | --- |
| BRZ | Zeolite | VSI Line 1 construction |  | $ | 67,682 |  |
| BRZ | Zeolite | Caterpillar 235 Excavator |  |  | 29,831 |  |
| BRZ | Zeolite | Permitting |  |  | 15,310 |  |
| BRZ | Zeolite | Major Equipment Repairs |  |  | 83,415 |  |
| USAC Montana | Antimony and precious metals | Plant and Office Equipment |  |  | 3,728 |  |
| USAC Montana | Antimony and precious metals | Two Caterpillar Forklifts |  |  | 58,600 |  |
| USAMSA | Madero | Buildings |  |  | 1,835 |  |
| USAMSA | Madero | Capitalized interest |  |  | 4,542 |  |
| USAMSA | Madero | Permitting |  |  | 56,461 |  |
| USAMSA | Madero | Plant construction |  |  | 3,820 |  |
| USAMSA | Madero | Leach Circuit |  |  | 107,023 |  |
| USAMSA | Madero | IVA Tax on Equipment |  |  | 36,619 |  |
| USAMSA | Puerto Blanco | Buildings |  |  | 10,395 |  |
| USAMSA | Puerto Blanco | Permitting |  |  | 48,299 |  |
| USAMSA | Puerto Blanco | Leach Circuit |  |  | 1,734 |  |
| USAMSA | Puerto Blanco | 500 Ton Ball Mill |  |  | 15,095 |  |
| USAMSA | Puerto Blanco | Land Payments San Miguel |  |  | 125,000 |  |
| USAMSA | Puerto Blanco | Permitting |  |  | 20,825 |  |
| USAMSA | Guadalupe | Property purchase |  |  | 1,559,615 |  |
| USAMSA | Guadalupe | Capitalized amortization |  |  | 14,591 |  |
| USAMSA | Guadalupe | Permitting |  |  | 2,502 |  |
| USAMSA | Soyatal | Permitting |  |  | 2,593 |  |
| USAMSA | Soyatal | Capitalized amortization |  |  | 42,498 |  |
| USAMSA | Wadley | Plant Improvements |  |  | 77,333 |  |
| USAMSA | Wadley | Used Truck |  |  | 1,385 |  |
| USAMSA | OTHER | Software |  |  | 4,165 |  |
| HILLGROVE | OTHER | Building construction |  |  | 44,136 |  |
| HILLGROVE | OTHER | Permiting |  |  | 4,200 |  |
| HILLGROVE | OTHER | Plant |  |  | 914,069 |  |
| HILLGROVE | OTHER | Equipment |  |  | 94,016 |  |
|  |  |  |  | $ | 3,451,317 |  |


ZEOLITE OPERATIONS

The oil and gas and mining industries could become a large application for BRZ zeolite used for remediation.


Item 1.  Description of Business

Antimony DivisionOur antimony smelter and precious metals plant is located in the Burns Mining District of Sanders County, Montana, approximately 15 miles west of Thompson Falls, MT. We hold 2 patented mill sites where the plant is located.  We have no "proven reserves" or "probable reserves" of antimony, as these terms are defined by the Securities and Exchange Commission.  Environmental restrictions preclude mining at this site.Mining was suspended in December 1983, because antimony could be purchased more economically from foreign sources.For 2015, and since 1983, we relied on foreign sources for raw materials, and there are risks of interruption in procurement from these sources and/or volatile changes in world market prices for these materials that are not controllable by us.  We have developed sources of antimony in Mexico but we are still depending on foreign companies for raw material in the future. We expect more raw materials from our own properties for 2016 and later years. We continue working with suppliers in North America, Central America, Europe, Australia, and South America.We currently own 100% of the common stock, equipment, and the leases on real property of United States Antimony, Mexico S.A. de C.V. or USAMSA, which was formed in April 1998.  We currently own 100% of the stock in Antimony de Mexico SA de CV (AM) which owns the San Miguel concession of the Los Juarez property.  USAMSA has three divisions (1) the Madero smelter in Coahuila that started expanded operations in late 2012, (2) the Puerto Blanco flotation mill and oxide circuit in Guanajuato that started operating on a test basis in late 2012 and is ramping up for 2016, and (3) mining properties that include the Los Juarez mineral deposit with concessions in Queretaro, the Wadley mining concessionin San Lis Potosi, the Soyatal deposits in Queretaro, and the Guadalupe properties in Zacatecas.In our existing operations in Montana, we produce antimony oxide, sodium antimonate, antimony metal, and precious metals.  Antimony oxide is a fine, white powder that is used primarily in conjunction with a halogen to form a synergistic flame retardant system for plastics, rubber, fiberglass, textile goods, paints, coatings and paper.  Antimony oxide is also used as a color fastener in paint, as a catalyst for production of polyester resins for fibers and film, as a catalyst for production of polyethelene pthalate in plastic bottles, as a phosphorescent agent in fluorescent light bulbs, and as an opacifier for porcelains.  Sodium antimonate is primarily used as a fining agent (degasser) for glass in cathode ray tubes and as a flame retardant.  We also sell antimony metal for use in bearings, storage batteries and ordnance.We estimate (but have not independently confirmed) that our present share of the domestic market and international market for antimony oxide products is approximately 4% and less than 1%, respectively.  We are the only significant U.S. producer of antimony products, while China supplies 92% of the world antimony demand.  We believe we are competitive both domestically and world-wide due to the following:

·

We have a reputation for quality products delivered on a timely basis.

·

We are a non-Chinese producer of antimony products.

·

We have two of the three operating antimony smelters in North and Central America.

·

We are the sole domestic producer of antimony products.

·

We can ship on short notice to domestic customers.

·

We are vertically integrated, with raw materials from our own mines, mills, and smelter in Mexico, along with the raw materials from exclusive supply agreements we have with numerous ore and raw material suppliers.

·

As a vertically integrated company, we will have more control over our raw material costs.

Following is a five year schedule of our antimony sales:


Item 1.  Description of Business

Concentration of Sales:During the two years ended December 31, 2015, the following sales were made to our three largest customers:


Item 1.  Description of Business

While the loss of one of our three largest customers would be a problem in the short term, we have numerous requests from potential buyers that we cannot fill, and we could quickly, in the present market conditions, be able to replace the lost sales.  Loss of all three of our largest customers would be more serious and may affect our profitability.Marketing: We employ full-time marketing personnel and have negotiated various commission-based sales agreements with other chemical distribution companies.Antimony Price Fluctuations: Our operating results have been, and will continue to be, related to the market prices of antimony metal, which have fluctuated widely in recent years.  The volatility of prices is illustrated by the following table, which sets forth the average prices of antimony metal per pound, as reported by sources deemed reliable by us.


Item 1.  Description of Business

A six year price range of our sales prices for antimony oxide and antimony metal, per pound, was as follows:


Item 1.  Description of Business

Antimony metal prices are determined by a number of variables over which we have no control.  These include the availability and price of imported metals, the quantity of new metal supply, and industrial and commercial demand.  If metal prices decline and remain depressed, our revenues and profitability may be adversely affected.We use various antimony raw materials to produce our products.  We currently obtain antimony raw material from sources in North America, Mexico, Europe, South America, Central America, and Australia.Zeolite DivisionWe own 100% of Bear River Zeolite Company, (BRZ), an Idaho corporation that was  incorporated on June 1, 2000.  BRZ has a lease with Webster Farm, L.L.C. that entitles BRZ to surface mine and process zeolite on property located near Preston, Idaho, in exchange for a royalty payment.  In 2010 the royalty was adjusted to $10 per ton sold.  The current minimum annual royalty is $60,000.  In addition, BRZ has more zeolite on U.S. Bureau of Land Management land.  A company controlled by the estate of Al Dugan, a significant stockholder and, as such, an affiliate of USAC, receives a payment equal to 3% of net sales on zeolite products. William Raymond and Nancy Couse are paid a royalty that varies from $1 to $5 per ton.  On a combined basis, royalties vary from 8%-13%.   BRZ has constructed a processing plant on the property and it has improved its productive capacity. In addition to a large amount of fully depreciated equipment that has been transferred from the USAC division, we have spent approximately $3,712,000 to purchase and construct the processing plant as of December 31, 2015.We have no "proven reserves" or "probable reserves" of zeolite, as these terms are defined by the Securities and Exchange Commission."Zeolite" refers to a group of industrial minerals that consist of hydrated aluminosilicates that hold cations such as calcium, sodium, ammonium, various heavy metals, and potassium in their crystal lattice.  Water is loosely held in cavities in the lattice.  BRZ zeolite is regarded as one of the best zeolites in the world due to its high CEC of approximately 180 meq/100 gr., its hardness and high clinoptilolite content, its absence of clay minerals, and its low sodium content.   BRZ's zeolite deposits’ characteristics which the mineral useful for a variety of purposes including:

·

Soil Amendment and Fertilizer.  Zeolite has been successfully used to fertilize golf courses, sports fields, parks and common areas, and high value agricultural crops

·

Water Filtration.  Zeolite is used for particulate, heavy metal and ammonium removal in swimming pools, municipal water systems, fisheries, fish farms, and aquariums.

·

Sewage Treatment.  Zeolite is used in sewage treatment plants to remove nitrogen and as a carrier for microorganisms.

·

Nuclear Waste and Other Environmental Cleanup.  Zeolite has shown a strong ability to selectively remove strontium, cesium, radium, uranium, and various other radioactive isotopes from solution.  Zeolite can also be used for the cleanup of soluble metals such as mercury, chromium, copper, lead, zinc, arsenic, molybdenum, nickel, cobalt, antimony, calcium, silver and uranium.

·

Odor Control.  A major cause of odor around cattle, hog, and poultry feed lots is the generation of the ammonium in urea and manure.  The ability of zeolite to absorb ammonium prevents the formation of ammonia gas, which disperses the odor.

·

Gas Separation.  Zeolite has been used for some time to separate gases, to re-oxygenate downstream water from sewage plants, smelters, pulp and paper plants, and fish ponds and tanks, and to remove carbon dioxide, sulfur dioxide and hydrogen sulfide from methane generators as organic waste, sanitary landfills, municipal sewage systems and animal waste treatment facilities.

·

Animal Nutrition.  Feeding up to 2% zeolite increases growth rates, decreases conversion rates, prevents worms, and increases longevity.

·

Miscellaneous Uses.  Other uses include catalysts, petroleum refining, concrete, solar energy and heat exchange, desiccants, pellet binding, horse and kitty litter, floor cleaner and carriers for insecticides, pesticides and herbicides.

Environmental MattersOur exploration, development and production programs conducted in the United States are subject to local, state and federal regulations regarding environmental protection.  Some of our production and mining activities are conducted on public lands.  We believe that our current discharge of waste materials from our processing facilities is in material compliance with environmental regulations and health and safety standards.  The U.S. Forest Service extensively regulates mining operations conducted in National Forests.  Department of Interior regulations cover mining operations carried out on most other public lands.  All operations by us involving the exploration for or the production of minerals are subject to existing laws and regulations relating to exploration procedures, safety precautions, employee health and safety, air quality standards, pollution of water sources, waste materials, odor, noise, dust and other environmental protection requirements adopted by federal, state and local governmental authorities.  We may be required to prepare and present data to these regulatory authorities pertaining to the effect or impact that any proposed exploration for, or production of, minerals may have upon the environment.  Any changes to our reclamation and remediation plans, which may be required due to changes in state or federal regulations, could have an adverse effect on our operations.  The range of reasonably possible loss in excess of the amounts accrued, by site, cannot be reasonably estimated at this time.We accrue environmental liabilities when the occurrence of such liabilities is probable and the costs are reasonably estimable. The initial accruals for all our sites are based on comprehensive remediation plans approved by the various regulatory agencies in connection with permitting or bonding requirements. Our accruals are further based on presently enacted regulatory requirements and adjusted only when changes in requirements occur or when we revise our estimate of costs to comply with existing requirements. As remediation activity has physically commenced, we have been able to refine and revise our estimates of costs required to fulfill future environmental tasks based on contemporaneous cost information, operating experience, and changes in regulatory requirements. In instances where costs required to complete our remaining environmental obligations are clearly determined to be in excess of the existing accrual, we have adjusted the accrual accordingly. When regulatory agencies require additional tasks to be performed in connection with our environmental responsibilities, we evaluate the costs required to perform those tasks and adjust our accrual accordingly, as the information becomes available. In all cases, however, our accrual at year-end is based on the best information available at that time to develop estimates of environmental liabilities.Antimony Processing SiteWe have environmental remediation obligations at our antimony processing site near Thompson Falls, Montana ("the Stibnite Hill Mine Site").  We are under the regulatory jurisdiction of the U.S. Forest Service and subject to the operating permit requirements of the Montana Department of Environmental Quality. At December 31, 2014 and 2015, we have accrued $100,000 to fulfill our environmental responsibilities.


LOS JUAREZ GROUP

The concessions collectively constitute 720 hectares. The claims are accessed by roads that lead to highways.

| 1. | San Miguel I and II are being purchased by a USAC subsidiary, Antimonio de Mexico, S. A. de C. V (AM), for $1,480,500. To date, we have paid $1,415,500 on the property, and have incurred significant permitting costs. The property consists of 40 hectares. |
| --- | --- |
| 2. | San Juan I and II are concessions owned by AM and include 466 hectares. |
| 3. | San Juan III is held by a lease agreement by AM in which we will pay a 10% royalty, based on the net smelter returns from another USAC Mexican subsidiary, named United States Antimony Mexico, S. A. de C. V. or USAMSA.  It consists of 214 hectares. |
|  |  |


Item 5   Market for Common Equity and Related Stockholder Matters

The approximate number of holders of record of our common stock at March 30, 2016, is 2,500.We have not declared or paid any dividends to our stockholders during the last five years and do not anticipate paying dividends on our common stock in the foreseeable future.  Instead, we expect to retain earnings for the operation and expansion of our business.


Item 6

Item 7Management's Discussion and Analysis or Plan of Operations


Item 6

Excess Mexico production costsDuring the two year period ending December 31, 2015, we incurred excess production costs at our Mexico operations.  At the beginning of each year, management determined a standard, or expected, cost to produce antimony products for shipment to Montana for further processing. For 2015 and 2014, the standard costs per pound was $3.95 and $4.45, respectively.  The production costs above the standard costs were calculated and reported in the above schedule of results of operations by division as “excess Mexico production costs”, which were $1,086,440 and $688,619 in 2015 and 2014, respectively. The excess Mexico production costs are primarily due to holding costs from inactivity at the Wadley and Los Juarez mines, the Puerto Blanco mill, and the loss of production at the Madero smelter from metalurgical testing and experimenting with various production methods and formulas.OverviewOur cost of production was elevated for the years ended December 31, 2015 and 2014, because we were starting a major mining and production facility in Mexico.  The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco and Madero, Mexico, which resulted in costs that won’t be incurred when construction and testing is complete.  To a lesser degree, we incurred similar testing costs at our plant in Thompson Falls, Montana.  In Mexico, there will still be some overlapping costs in 2016 because the smelter is finishing a major expansion in its physical plant.  The production from Mexico should be greater for 2016 than 2015 once the plant expansion is complete and the management and crew at the Madero smelter can concentrate their efforts on production activities.The non-cash expense items totaled $1,075,423 for 2015 and included $932,786 for depreciation and amortization, $5,137 for accretion, and $137,500 for director compensation.The non-cash expense items totaled $903,392 for 2014 and included $780,782 for depreciation and amortization, $(2,390) for accretion, and $125,000 for director compensation.We are producing and buying raw materials, which will allow us to ensure a steady flow of products for sale.  Our smelter at Madero, Mexico, was producing a significant portion of our raw materials in 2014 and 2015.  We will still purchase a significant portion of our raw materials from suppliers for our smelter in Montana.We completed installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter in the fourth quarter of 2014.  We expected the pipeline to reduce our smelter fuel cost by approximately 75%.  Our smelter fuel cost (propane) in Mexico was approximately $700,000 for 2013 and $690,000 using 8 furnaces for the first nine months of 2014, resulting in a cost of approximately $1.27 per pound.  Our natural gas cost was $348,260 to produce 1,105,350 pounds of antimony in 2015, or approximately $0.32 per pound, a decrease of $0.95 per pound (74.8%).We are proceeding with the installation of a 400 - 500 ton per day flotation mill that we expect to cost between $400,000 and $500,000 to install.  The concrete work for the mill has been completed, and work will be ongoing as we generate cash from operations. This mill will be dedicated to processing ore from the Los Juarez mining property.  We are in a waiting period for approval of permits necessary to process the Los Juarez ore.  We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill. When approved, the restart of production from Los Juarez will create a significant increase in our precious metals revenue for 2016 and years forward.Our principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana.  With increased production, we expect to widen our base of customers.Results of OperationsComparison of Years ended December 31, 2015and 2014


Item 6

·

 During the two year period ended December 31, 2015, the most significant event affecting our financial performance was the decrease in the price of antimony (see table page 6).  During the year ended December 31, 2015, the most significant event was construction and start-up of a plant to process antimony concentrate for Hillgrove LTD of Australia.  The expansion of production at our Mexico operations caused our reported operating costs to be elevated when compared to years when we were not initiating the start-up of new production facilities. The Mexican production of antimony (metal contained) and sold was 586,368 pounds during 2014 compared to 1,105,350 pounds for 2015, an increase of 88.5%.  2015 and 2014 are regarded as “start- up years” during which the holding costs, permitting, and metallurgical research was categorized as a “non-production” operating expense. During both years, Los Juarez concentrate was not produced and Soyatal oxide ore was in a research phase at the Puerto Blanco oxide circuit. Guadalupe was not in production for most of 2015while they prepared the underground for mining higher grade rock.  The Puerto Blanco mill circuits were utilized less than 10% of their capacity.  Going forward, the increased supply of raw material from Mexico and the metal prices for both antimony and precious metals will be the most significant factors influencing our operations.  The following are highlights of the significant changes during 2015 and the two year period then ended:

a.

Our sales of antimony for 2015 increased by approximately 759,000 pounds (44%) from 2014. Our revenues from antimony increased in 2015 by approximately $1,712,000 (21%) from 2014 due to an increase in the amount of antimony sold.  The average sale price for antimony contained in all products declined from $4.71 in 2014 to $3.96 per pound in 2015, a decrease of $0.75 (15.9%).

b.

The metallurgical problem with the Los Juarez feed has been solved, and mining, milling, and smelting will resume when the necessary permits are obtained. This will put the Puerto Blanco mill in operation. During 2015 and 2014, the Puerto Blanco mill was operating at less than 10% of capacity.

c.

The Soyatal oxide ore recovery problem has been solved, and high grade oxide concentrates can be produced. Oxide mineralized rock from dumps will be mined and underground development will be started when the need for raw materials increases.

d.

Explosives were permitted at Guadalupe in 2014, and underground development has started.

·

Assuming that Guadalupe and Los Juarez feed are going to the Puerto Blanco mill, the 500 ton per day mill that is estimated at 40% of completion will need to be completed.

·

Our cost of goods sold for antimony increased by approximately $1,958,000 for 2015 because of the increase in antimony sold. For the year ended December 31, 2015, costs of goods sold include operating and non-operating production costs from Mexico operations.  Our switch to natural gas as a fuel for our smelter at Madero in the fourth quarter of 2014 has provided a significant improvement in our Mexico operating costs for 2015.  Prior to 2015, the cost of propane was our second largest operating cost, and the switch to natural gas has decreased the per pound cost by 75%.  The cost of goods sold during both years has been impacted by increases in the cost of operating supplies, fuel, trucking, insurance, refractory costs, and steel.

·

Our volume of zeolite sold was up 44%, from 11,079 tons in 2014 to 15,901 tons in 2015.  The tons of zeolite sold decreased by approximately 100 tons in 2014 from 2013. Total revenue increased by approximately $584,000 in 2015 and decreased approximately $33,000 in 2014. Our cost of goods sold increased by approximately $452,206 for 2015, and increased by approximately $55,000 for 2014 from 2013.  Cost of sales increased for 2015 primarily because we had an increase in the volume of product sold.

·

General and administrative costs, as reported in our statement of operations, include fees paid to directors through stock based compensation. In 2015 and 2014, we incurred $40,000 each year in fees to the NYSE MKT that was included in general and administrative expenses.  General and administrative costs for 2015 and 2014 include general and administrative costs related to commencement of production at our facilities in Mexico.  The combined general and administrative costs were 5.6%, and 5.8%, of sales for 2015 and 2014, respectively.  The combined general and administrative salaries were 3.3%, and 3.9% of sales for 2015 and 2014, respectively.

·

The increase in professional fees for 2015 (approximately $73,000) was primarily due to increased costs related to our audits and financial statement preparation and for attorney fees related to alleged violations of an operating agreement with our former Investor Relations representative.

·

Factoring costs decreased in 2015 from approximately $49,000 in 2014 to approximately $41,000. Factoring costs decreased in 2014 by approximately $22,000 as we were able to reduce our collection time for accounts receivable.  The discounts we gave for early payments increased by approximately $23,000 in 2015 from 2014.

SubsidiariesThe Company has a 100% investment in two subsidiaries in Mexico, USAMSA and AM, whose mineral property carrying values were assessed at December 31, 2015 and 2014 for impairment.  Management’s assessment of the subsidiaries’ fair value was based on their future benefit to us.


Item 6

Our net working capital decreased for the year ended December 31, 2015, from a positive amount of $48,261 at the beginning of the year to a negative amount of $293,504 at the end of 2015.  Our current assets decreased primarily due to an decrease in our inventories in Montana and in Mexico.  The capital improvements were paid for with cash and debt.  Our current liabilities increased in most categories during 2015.

During the year ending December 31, 2016, we are planning to finance our improvements with operating cash flow. Our 2016 improvements are expected to include completion of the installation at the Madero smelter, completion of cyanide leach circuits at both Madero and Puerto Blanco, and completing the installation of a 400 - 500 ton per day flotation mill at Puerto Blanco.

In 2015, cash used by operations was primarily due to our net loss of approximately $840,000 which was mostly offset by depreciation and amortization of approximately $932,000.  We negotiated decreases in our current liabilities for raw material of approximately $915,000 during 2015.The current portion of our long term debt is serviceable from the cash generated by operations.Our stockholders’ equity section makes note that we have a liquidation preference of $5,884,376 for our preferred stock.  This consists of a liquidation payment of $5,281,519 due if we liquidate our company or sell substantially all our assets, and $602,857 of undeclared dividends.  The Board of Directors’ does not intend to declare dividends on preferred stock as due and payable at any time in the near future.  We do not feel that the liquidation preference and undeclared dividends related to our preferred stock will be an impediment to raising capital in the future by issuing additional shares of common stock, and are not going to affect our liquidity.


PART III

Business Experience of Directors and Executive OfficersJohn C. Lawrence.  Mr. Lawrence has been the president and a director since our inception in 1969.  Mr. Lawrence was the president and a director of AGAU Mines, Inc., our corporate predecessor.  He is a member of the Society of Mining Engineers and a recipient of the Uuno Sahinen Silver Medallion Award presented by Butte Tech, University of Montana.  He has a vast background in mining, milling, smelting, chemical processing and oil and gas.Gary D. Babbitt.  Mr. Babbitt has experience in the mining industry with approximately 30 years dealing with joint ventures, purchases, royalty leases and contracts. He has a working knowledge of Spanish and has negotiated supply and mining agreements in Mexico.  Mr. Babbitt has a B.A. from the Albertson College of Idaho, and earned his J.D. from the University of Chicago.Russell C. Lawrence.  Mr. Lawrence has experience in applied physics, mining, refining, excavation, electricity, electronics, and building contracting.  He graduated from the University of Idaho in 1994 with a degree in physics, and worked for the Physics Department at the University of Idaho for a period of 10 years. He has also worked as a building contractor and for USAC at the smelter and laboratory at Thompson Falls, for USAMSA in the construction and operation of the USAMSA smelter in Mexico, and for Antimonio de Mexico, S. A. de C. V. at the San Miguel Mine in Mexico.Hart W. Baitis.  Mr. Baitis graduated from the University of Oregon in 1971 with a B.S. in Geology, and was awarded a Ph. D. in Geology in 1976. He has 35 years of experience as an exploration geologist in the United States, Canada, Central America, and Mexico.  Mr. Baitis is experienced in numerous geologic environments and terrains, and has been involved in all phases of exploration, ranging from field geologist, consultant, management, and acquisition team director.Whitney Ferer.  Mr. Ferer was nominated to the board of USAC in February 2012. He worked for 34 years for Aaron Ferer & Sons Co. headquartered in Omaha, Nebraska, where he was the Vice President of Operations and Senior Trader, as well  Vice Chairman of the Board of AF&S Co..  He has been involved in the patenting of various processes for the breakdown of plastics and metal recovery, and was Vice President of the Lead & Zinc Division of AF&S.  In addition, Mr. Ferer has been active in the trading of all metals, and facilitated the opening of eight offices in the Far East and China for AF&S.  Mr. Ferer has recently opened his own company W.H. Ferer Co., LLC.   He is one of the largest traders of antimony metal and oxides in the United States and, additionally, he handles approximately 20-30 elements in various forms and grades.Jeffrey D. Wright.  Mr. Wright graduated from North Carolina University in 1991, and from the University of Southern California, Marshall School of Business (MBA) in 2004.  Mr. Wright was a naval officer from 1991 through 1996, serving aboard the aircraft carrier USS Carl Vinson and the destroyer USS John Young.  After duty in the military, Mr. Wright held successively more responsible positions in the securities and finance industry.  From 2011 through 2013 he was the managing director metals and mining research for Global Hunter Securities, and he held the same position for H.C. Wainwright for 2013 through 2015.Alicia Hill.  Ms. Hill was hired by the Company in 2006 as an accounting assistant, and was eventually promoted to chief accountant responsible for the recording of transactions for three companies.  In 2011, she was appointed Company Controller, Secretary, and Treasurer.  Ms. Hill has guided the Company through the listing on the NYSE-MKT, in the addition of a new division in Mexico, and has been the liaison with the Company’s auditors through a progressively complicated reporting process.
Daniel L. Parks. Mr. Parks graduated from the University of Idaho in 1974 with a B.S. in Accounting, and was licensed as a certified public accountant in 1976.  He worked as an auditor for Coopers & Lybrand for three years, as controller for a lumber manufacturing company for one year, and owned his own accounting practice for thirty years.  Mr. Parks was extensively involved in auditing and financial statement preparation during this time.John C. Gustaven.  Mr. Gustaven graduated from Rutgers University in 1970 with a BS in chemistry and started work for Harshaw Chemical (purchased by Amspec Chemical Corporation), a major producer of antimony trioxide.  Mr. Gustaven took engineering courses from 1976 through 1980, and became president and treasurer of the company in 1983.  He was promoted CEO in 1990.  Mr. Gustaven designed a new type of production furnace for antimony trioxide that eventually produced 20 million pounds of antimony trioxide per year.  Mr. Gustaven is conversant in Spanish, Chinese, and other languages, and travelled to many countries as part of his duties as president of Amspec Chemical Corporation.  Mr. Gustaven came to work at United States Antimony Corporation in November of 2011.Matt Keane.  Mr. Keane graduated from Mankato State University in 1978 with degrees in geography and environmental studies.  Mr. Keane was owner of a construction business and a retail building supply business before becoming the director of sales for United States Antimony Corporation in 2000.  Mr. Keane has developed the Company’s growing zeolite sales through Bear River Zeolite and the increase in the Company’s share of the domestic market for antimony products.We are not aware of any involvement by our directors or executive officers during the past five years in legal proceedings that are material to an evaluation of the ability or integrity of any director or executive officer.Board Meetings and Committees   Our Board of Directors held four (4) regular meetings during the 2015 calendar year.  Each incumbent director attended all of the meetings held during the 2015 calendar year, in the aggregate, by the Board and each committee of the Board of which he was a member.Our Board of Directors established an Audit Committee on December 10, 2011. It consists of four members, Gary Babbitt (Chairman), Whitney Ferer, Jeffrey Wright, and Hart Baitis.  None of the Audit Committee members are involved in our day-to-day financial management.  Jeffrey Wright is considered a financial expert.During 2011, the Board also established a Compensation Committee and a Nominating Committee.Board Member Compensation   Following is a summary of fees, cash payments, stock awards, and other reimbursements to Directors during the year ended December 31, 2015:Directors Compensation

| Name |  | Age |  | Affiliation |  | Expiration of Term |
| --- | --- | --- | --- | --- | --- | --- |
|  |  |  |  |  |  |  |
| John C. Lawrence |  | 77 |  | Chairman, President, Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| John C. Gustavsen |  | 67 |  | First Vice-President |  | Annual meeting |
|  |  |  |  |  |  |  |
| Russell C. Lawrence |  | 47 |  | Second Vice-President and Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Matthew Keane |  | 60 |  | Third Vice-President |  | Annual meeting |
|  |  |  |  |  |  |  |
| Daniel L. Parks |  | 67 |  | Chief Financial Officer |  | Annual meeting |
|  |  |  |  |  |  |  |
| Alicia Hill |  | 34 |  | Secretary, Controller and Treasurer |  | Annual meeting |
|  |  |  |  |  |  |  |
| Gary D. Babbitt |  | 70 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Whitney Ferer |  | 57 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Hart W. Baitis |  | 66 |  | Director |  | Annual meeting |
|  |  |  |  |  |  |  |
| Jeffrey D. Wright |  |  |  | Director |  | Annual meeting |


PART III

Section 16(a) Beneficial Ownership Reporting Compliance   Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers and the holders of 10% or more of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and stockholders holding more than 10% of our common stock are required by the regulation to furnish us with copies of all Section 16(a) forms they have filed. Based solely on our review of copies of Forms 3, 4 and 5 furnished to us, Mr. Baitis, Mr. Babbitt, Mr. Ferer, and Mr. Russell Lawrence did not file timely Forms 3, 4 or Form 5 reports during 2015 and 2014.Code of EthicsThe Company has adopted a Code of Ethics that applies to the Company's executive officers and its directors.  The Company will provide, without charge, a copy of the Code of Ethics on the written request of any person addressed to the Company at: United States Antimony Corporation, P.O. Box 643, Thompson Falls, MT 59873.


PART III

(2)

These figures represent the fair value, as of the date of issuance, the annual director's fees payable to John C.  Lawrence and Russell Lawrence in shares of USAC's common stock.

Compensation for all executive officers, except for the President/CEO position, is recommended to the compensation committee of the Board of Directors by the President/CEO.  The compensation committee makes the recommendation for the compensation of the President/CEO.  The compensation committee has identified a peer group of mining companies to aid in reviewing the President’s compensation recommendations for executives, and for reviewing the compensation of the President/CEO.  The full Board approves the compensation amounts recommended by the compensation committee. Currently, the executive managements’ compensation only includes base salary and health insurance.  The Company does not have annual performance based salary increases, long term performance based cash incentives, deferred compensation, retirement benefits, or disability benefits.  For the year ended December 31, 2015, Russell Lawrence (VP) received an increase in base compensation of $15,000 annually.  The Board of Directors determined that Mr. Lawrence’s compensation for the prior years was not adequate for the duties assigned to Mr. Russell as the Vice President for Latin America, and that a raise was appropriate to compensate for management of the Latin American operations.

Two executive officers, the President/CEO and the Vice-President for the Latin American operations, receive restricted stock awards for their services as Board members.

The following table sets forth information concerning the outstanding equity awards at December 31, 2015, held by our principal executive officer.  There were not any other outstanding equity awards or plan based awards to officers or directors as of December 31, 2015.


PART III

Item 12   Security Ownership of Certain Beneficial Owners and Management


PART III

(1)

Beneficial Ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Shares of common stock subject to options or warrants currently exercisable or convertible, or exercisable or convertible within 60 days of March 30, 2016, are deemed outstanding for computing the percentage of the person holding options or warrants but are not deemed outstanding for computing the percentage of any other person. Percentages are based on a total of 66,316,278shares of common stock, 750,000 shares of Series B Preferred Stock, 177,904 shares of Series C Preferred Stock, and 1,751,005 shares of Series D Preferred Stock outstanding on March 30, 2016.  Total voting stock of 68,245,187 shares is a total of all the common stock issued, and all of the Series C and Series D Preferred Stock.

(2)

Includes 4,031,107 shares of common stock and 250,000 stock purchase warrants.  Excludes 183,324 shares owned by Mr. Lawrence's sister, as to which Mr. Lawrence disclaims beneficial ownership.

(3)

Includes shares owned by the estate of Al W. Dugan and shares owned by companies owned and controlled by the estate of Al W. Dugan.  Excludes 183,333 shares owned by Lydia Dugan as to which the estate of Mr. Dugan disclaims beneficial ownership.

(4)

The outstanding Series C and Series D preferred shares carry voting rights equal to the same number of shares of common stock.

(5)

 The outstanding Series B preferred shares carry voting rights only if the Company is in default in the payment of declared dividends.  The Board of Directors has not declared any dividends as due and payable for the Series B preferred stock.


PART III

*    Filed herewith.

| 14.0 |  | Code of Ethics\* |
| --- | --- | --- |
|  |  |  |
| 31.1 |  | Rule 13a-14(a)/15d-14(a) Certifications, Certification of John C. Lawrence\* |
|  |  |  |
| 32.1 |  | Section 1350 Certifications, Certification of John C. Lawrence\* |
|  |  |  |
| 44.1 |  | CERCLA Letter from U.S. Forest Service filed as an exhibit to USAC form 10-QSB for the quarter ended June 30, 2000 (File No. 001-08675) are incorporated herein by this reference and filed as an exhibit to USAC's Form 10-KSB for the year ended December 31, 1995 (File No. 1-8675) is incorporated herein by this reference |


F-5

The Company's revenues from antimony sales are strongly influenced by world prices for such commodities, which fluctuate and are affected by numerous factors beyond the Company's control, including inflation and worldwide forces of supply and demand. The aggregate effect of these factors is not possible to predict accurately.


F-11

Factoring fees paid by the Company during the years ended December 31, 2015 and 2014, were $41,117 and $49,364, respectively.  For the years ended December 31, 2015 and 2014, net accounts receivable of approximately $2.10 million and $2.30 million, respectively, were sold under the agreement.Proceeds from the sales were used to fund inventory purchases and operating expenses.  The agreement is for a term of one year with automatic renewal for additional one-year terms.5.InventoriesThe major components of the Company's inventories at December 31, 2015 and 2014 were as follows:


F-11

At December 31, 2015 and 2014, antimony metal consisted principally of recast metal from antimony-based compounds, and metal purchased from foreign suppliers.  Antimony oxide inventory consisted of finished product oxide held at the Company's plant. Antimony concentrates and ore was held primarily at sites in Mexico and is essentially raw material, carried at cost.   At December 31, 2015, antimony inventory is valued at net realizable value. The Company's zeolite inventory consists of salable zeolite material held at BRZ's Idaho mining and production facility, and is carried at cost.


F-12

At December 31, 2015 and 2014, the Company had $891,576 and $1,113,847 of assets that were considered to be construction in progress and had not yet been depreciated.


F-13

The Company’s total asset retirement obligation and accrued reclamation costs of $260,327 and $255,190 at December 31, 2015 and 2014, respectively, include reclamation obligations for Idaho and Montana operations of $107,500.8.Other AssetsGuadalupeOn March 7, 2012 and on April 4, 2012 the Company entered into a supply agreement and a loan agreement, respectively, (“the Agreements”) with several individuals collectively referred to as ‘Grupo Roga’ or ‘Guadalupe.’  During the term of the supply agreement the Company funded certain of Guadalupe’s equipment purchases, tax payments, labor costs, milling and trucking costs, and other expenses incurred in the Guadalupe mining operations for approximately $112,000. In addition to the advances for mining costs, the Company purchased antimony ore from Guadalupe that failed to meet agreed upon antimony metal recoveries and resulted in approximately $475,000 of excess advances paid to Guadalupe.The Agreements with Guadalupe granted the Company an option to purchase the concessions outright for $2,000,000.  On September 29, 2015, the Company notified the owners of Guadalupe that it was exercising the option to purchase the Guadalupe property. The option exercise agreement allowed the Company to apply all amounts previously due the Company by Guadalupe of $586,893 to the purchase price consideration, resulting in a net obligation for the purchase of the Guadalupe mine of $1,413,107. The Company is obligated to make annual payments that vary from $60,000 to $149,077 annually through 2026.  The debt payments are non-interest bearing. The Company determined the net present value of the future contractual stream of payments to be $972,722 using a 6% discount rate.  The Company recorded $972,722 as the cost of the concessions and the debt payable equal to total payments due of $1,413,107 less a discount of $440,385.  The discount is being amortized to interest expense using the effective interest method over the life of the debt.  As of December 31, 2015, the Company had made $15,000 in payments toward this debt and amortized $14,591 of discount as interest expense.   The net balance of the debt at December 31, 2015 was $972,312.


F-15

10.         Notes Payable to BankAt December 31, 2015, the Company had the following notes payable to the bank:


F-15

These notes are personally guaranteed by John C. Lawrence the Company’s President and Chairman of the Board of Directors.    The maximum amount available for borrowing under each note is $99,998.   There were no notes payable to bank at December 31, 2014.

11.         Hillgrove Advances Payable

On November 7, 2014, the Company entered into a loan and processing agreement with Hillgrove Mines Pty Ltd of Australia (Hillgrove) by which Hillgrove will advance the Company funds to be used to expand their smelter in Madero, Mexico, and in Thompson Falls, Montana, so that they may process antimony and gold concentrates produced by Hillgrove’s mine in Australia.  The agreement requires that the Company construct equipment so that it can process approximately 200 metric tons of concentrate initially shipped by Hillgrove, with a provision so that the Company may expand to process more than that.  The parties agreed that the equipment will be owned by USAC and USAMSA. The final terms of when the repayment takes place have not yet been agreed on.  The agreement called for the Company to sell the final product for Hillgrove, and Hillgrove to have approval rights of the customers for their products.  The agreement allows the Company to recover its operating costs as approved by Hillgrove, and to charge a 7.5% processing fee and a 2.0% sales commission.  The initial term of the agreement is five years; however, Hillgrove may suspend or terminate the agreement at its discretion.  The Company may terminate the agreement and begin using the furnaces for their own production if Hillgrove fails to recommence shipments within 365 days of a suspension notice. If a stop notice is issued between one year and two years, there is a formula to prorate the repayment amount from 50% to 81.25%.  If a stop order is issued after two years, the repayment obligation is 81.25% of the funds advanced at that point.  At December 31, 2015, management has determined that it is likely that the Company’s  repayment obligation will be 81.25% of the total amounts advanced. As of December 31, 2015, Hillgrove has advanced the Company a total of $1,397,016.  Of this amount, approximately 18.75% or $262,408 has been recorded as deferred earned credit and is being recognized ratably through the period ending November 7, 2016 which is when the 81.25% repayment terms of the agreement is applicable.  During the year ended December 31, 2015, $125,191 of the deferred earned credit was recognized with the remaining balance of $120,238 to be recognized in 2016.   At December 31, 2015, the amount due to Hillgrove for the advances is $1,134,608 which is approximately 81.25% of the total amount advanced.

| Promissory note payable to First Security Bank of Missoula,  bearing interest at 3.150%, maturing February 27, 2016,  payable on demand, collateralized by a lien on Certificate of Deposit number 48614 |  | $ | 36,881 |  |
| --- | --- | --- | --- | --- |
| Promissory note payable to First Security Bank of Missoula,  bearing interest at 3.150%, maturing February 27, 2016,  payable on demand, collateralized by a lien on Certificate of  Deposit number 48615 |  |  | 93,791 |  |
|  |  |  |  |  |
| Total notes payable to bank |  | $ | 130,672 |  |


F-17

At December 31, 2015, warrants for purchase of 250,000 shares of the Company’s common stock for $0.25 per share are outstanding and have no expiration date.   These warrants are owned by the Company’s president.Preferred StockThe Company's Articles of Incorporation authorize 10,000,000 shares of $0.01 par value preferred stock available for issuance with such rights and preferences, including liquidation, dividend, conversion, and voting rights, as the Board of Directors may determine.Series BDuring 1993, the Board established a Series B preferred stock, consisting of 750,000 shares.  The Series B preferred stock has preference over the Company's common stock and Series A preferred stock; has no voting rights (absent default in payment of declared dividends); and is entitled to cumulative dividends of $0.01 per share per year, payable if and when declared by the Board of Directors.  During the years ended December 31, 2015 and 2014 the Company recognized $7,500 in Series B preferred stock dividend.  In the event of dissolution or liquidation of the Company, the preferential amount payable to Series B preferred stockholders is $1.00 per share plus dividends in arrears. No dividends have been declared or paid with respect to the Series B preferred stock. The Series B Preferred stock is no longer convertible to shares of the Company’s common stock.  At December 31, 2015 and 2014, cumulative dividends in arrears on the outstanding Series B shares were $157,500 and $150,000, respectively.Series CDuring 2000, the Board established a Series C preferred stock, consisting of 205,996 shares.  In 2002, 28,092 shares were converted to common stock and cancelled, leaving 177,904 Series C preferred shares authorized and outstanding.  The Series C preferred stock has preference over the Company’s common stock and has voting rights equal to that number of shares outstanding, but no conversion or dividend rights.  In the event of dissolution or liquidation of the Company, the preferential amount payable to Series C preferred stockholders is $0.55 per share.


F-19

At December 31, 2015, the Company has United States net operating loss carry forwards of approximately $186,000 that expire at various dates between 2030 and 2035.  In addition, the Company has Montana state net operating loss carry forwards of approximately $2,313,000 which expire between 2017 and 2022, and Idaho state net operating loss carry forwards of approximately $940,000, which expire between 2033 and 2035.  The Company has approximately $8.4 million of Mexican net operating loss carry forwards which expire between 2022 and 2025.At December 31 2015 and 2014, the Company had deferred tax assets arising principally from net operating loss carry forwards for income tax purposes.  As management cannot determine that it is more likely than not the benefit of the net deferred tax asset will be realized, a valuation allowance equal to 100% of the net deferred tax asset has been recorded at December 31, 2015 and 2014.The income tax provision differs from the amount of income tax determined by applying the U.S. federal income tax rate to pretax loss for the years ended December 31, 2015 and 2014, due to the following:


F-20

In addition, during 2014, Mr. Lawrence loaned the Company $65,300 for short-term operating capital and was paid back without interest during 2014.16.Commitments and ContingenciesIn 2005, Antimonio de Mexico, S. A. (“AM”) signed an option agreement that gives AM the exclusive right to explore and develop the San Miguel I and San Miguel II concessions for annual payments.  Total payments will not exceed $1,430,344, reduced by taxes paid.  During the years ended December 31, 2015 and 2014, $127,500 and $200,000, respectively, was paid and capitalized as mineral rights in accordance with the Company’s accounting policies.  At December 31, 2015, the following payments are scheduled: $65,000 by March 31, 2016.In June of 2013, the Company entered into a lease to mine antimony ore from concessions located in the Wadley Mining district in Mexico.  The lease calls for a mandatory term of one year and requires payments of $29,000 per month.  The lease is renewable each year with a 15 day notice to the lessor, and agreement of terms.   The lease was renewed in June of 2015.From time to time, the Company is assessed fines and penalties by the Mine Safety and Health Administration (“MSHA”).  Using appropriate regulatory channels, management may contest these proposed assessments.   At December 31, 2015 and 2014, the Company has no accruals relating to such assessments.


Results of Operations by Division

During the two year period ended December 31,
2016, the most significant event affecting our financial
performance was the decrease in the price of antimony (see table
page 6). During the first half of 2016, the price for antimony hit
a seven year low. By the ended of 2016, we stopped the processing
of antimony concentrate for Hillgrove Mines, Ltd., of Australia and
started production from our own mines in Mexico. The Mexican
production from our own mines was very low in 2015 and 2016 due to
the processing of concentrates from Hillgrove. Antimony (metal
contained) produced and sold from Hillgrove concentrates was
1,105,350 pounds during 2015 compared to 1,513,923 pounds for 2016,
an increase of 37%. The Puerto Blanco mill circuits were utilized
less than 10% of their capacity. Going forward, the increased
supply of raw material from Mexico and the metal prices for both
antimony and precious metals will be the most significant factors
influencing our operations.
During
the two year period ending December 31, 2016, we incurred excess
production costs at our Mexico operations. At the end of each year,
management determined an estimated portion of each operating unit
that was operating at less than expected capacity and assigned a
portion of that years cost to excess operating costs. The
production costs above the expected costs were reported in the
above schedule of results of operations by division as
“excess Mexico production costs”, which were $357,706
in 2016 and $1,086,440 in 2015. The excess Mexico production costs
are primarily due to holding costs from inactivity at the Wadley
and Los Juarez mines, the Puerto Blanco mill, and the loss of
production at the Madero smelter from metalurgical testing and
experimenting with various production methods and
formulas.
The
following are highlights of the significant changes during 2016 and
the two year period then ended:


Subsidiaries

Our net
working capital decreased for the year ended December 31, 2016,
from a negative amount of $293,504 at the beginning of
the year to a negative amount of $1,689,568 at the end of 2016. Our
current assets decreased primarily due to a decrease in our
inventories and accounts receivable, in Montana and in Mexico. The
capital improvements were paid for with cash and debt. Our current
liabilities increased primarily in the amount of accrued income
taxes payable and the current portion of long term debt due during
2016.
During
the year ending December 31, 2017, we are planning to finance our
improvements with operating cash flow. Our 2017 improvements are
expected to include improvements at both the Madero smelter and the
Thompson Falls smelter, and completing the installation of a leach
circuit at Puerto Blanco.
In
2016, cash provided by operations was primarily due to a reduction
of our inventories of approximately $239,000. We negotiated
decreases in our current liabilities for raw material of
approximately $915,000 during 2015.
The
current portion of our long term debt is serviceable from the cash
generated by operations.
At
December 31, 2016, our financial statements show that we have
negative working capital of approximately $1.7 million and
accumulated deficit of approximately $25.4 million.  In
addition, we have incurred losses for the prior three years.
These factors indicate that there may be doubt regarding our
ability to continue as a going concern for the next twelve
months.
During
the year ended December 31, 2016, we endured some of the lowest
prices for antimony in the past seven years, with an average sales
price for our products of only $2.98 per pound of metal
contained.  As of late March 2017, the price for antimony
metal contained is approximately $4.00 per pound.  While we
experience increase in our raw material cost in the United States
as a result, most of the $1.02 market increase will result in
increased cash flow.
In
addition, we have cut costs for our labor at our Mexico locations
which will result in a lower cost of raw material from Mexico.
These cuts have resulted from not processing concentrates from
Hillgrove Mines of Australia LTD in 2017. This has resulted in a
large reduction in our work force at our Madero smelter, along with
a significant decrease in our operating costs for fuel, natural
gas, electricity, and reagents. Although our total production in
Mexico will decrease due to the lack of Hillgrove concentrates, we
are ramping up production from our own mining properties. We are
currently on schedule to have seventeen small rotating furnaces in
operation by the second quarter of 2017.
In
addition, we have implemented wage and other cost reductions across
at the corporate level that will decrease our administrative costs
in 2017. We expect to continue paying a low cost for propane in
Montana, which in years past has been a major operating
cost.
In
2017, we have negotiated a reduced monthly lease cost for the
Wadley mine approximately $11,600 a decrease from $23,200 per
month.  In addition, we paid the final installment to purchase
mining concessions in the Los Juarez mining area.  In 2015 and
2016, we paid $100,000 and $68,600, respectively, for these
concession rights.
We
believe that our current circumstances and actions taken by
management will enable us to be actively operating for the next
twelve months.
Our
stockholders’ equity section makes note that we have a
liquidation preference of $5,884,376 for our preferred stock. This
consists of a liquidation payment of $5,281,519 due if we liquidate
our company or sell substantially all our assets, and $651,506 of
undeclared dividends. The Board of Directors’ does not intend
to declare dividends on preferred stock as due and payable at any
time in the near future. We do not feel that the liquidation
preference and undeclared dividends related to our preferred stock
will be an impediment to raising capital in the future by issuing
additional shares of common stock, and are not going to affect our
liquidity.

| Financial Condition and Liquidity |  |  |
| --- | --- | --- |
|  | 2016 | 2015 |
| Current Assets | $1,692,555 | $2,136,326 |
| Current liabilities | (3,382,123) | (2,429,830) |
| Net Working Capital | $(1,689,568) | $(293,504) |
|  |  |  |
| Cash provided (used) by operations | $425,837 | $358,453 |
| Cash used for capital outlay | (583,029) | (1,704,037) |
| Cash provided (used) by financing: |  |  |
| Net payments from factor | 136,617 | 468 |
| Proceeds from notes payable to bank | 36,645 | 130,672 |
| Proceeds from (paymrnts to) Hillgrove advances | - | 1,198,445 |
| Principal paid on long-term debt | (175,238) | (94,141) |
| Checks issued and payable | 35,682 | - |
| Received on notes receivable for stock | - | 120,000 |
| Net change in cash | $(123,486) | $9,860 |


Item 6

Excess Mexico production costsDuring the three year period ending December 31, 2014, we incurred excess production costs at our Mexico operations.  At the beginning of each year, management determined a standard, or expected, cost to produce antimony products for shipment to Montana for further processing. For 2014, 2013, and 2012, the standard costs per pound was $4.45, $4.04, and $4.51, respectively.  The production costs above the standard costs were calculated and reported in the above schedule of results of operations by division as “excess Mexico production costs”, which were $688,619, $1,095,839, and 678,053 in 2014, 2013, and 2012, respectively. The excess Mexico production costs are primarily due to holding costs from inactivity at the Los Juarez mine and the Puerto Blanco mill, and the loss of production at the Madero smelter from metalurgical testing and experimenting with various production methods and formulas.OverviewOur cost of production was elevated for the years ended December 31, 2013 and 2014, because we were starting a major mining and production facility in Mexico.  The same workers responsible for production were also a significant part of building and testing the manufacturing plants and equipment at Puerto Blanco and Madero, Mexico, which resulted in costs that won’t be incurred when construction and testing is complete.  To a lesser degree, we incurred similar costs at our plant in Thompson Falls, Montana.  In Mexico, there will still be some overlapping costs in the first six months of 2015 because the smelter is in the process of a major expansion in its physical plant.  The production from Mexico should be significantly greater for 2015 than 2014 once the plant expansion is complete.The non-cash expense items totaled $908,172 for 2014 and included $780,782 for depreciation and amortization, $(2,390) for accretion, and $125,000 for director compensation.The non-cash expense items totaled $1,076,229 for 2013 and included $688,738 for depreciation and amortization, $8,040 for accretion, $150,000 for director compensation, and $229,451 for an increase in the valuation allowance for deferred income taxes.We are producing and buying raw materials, which will allow us to ensure a steady flow of products for sale.  Our smelter at Madero, Mexico, was producing a significant portion of our raw materials in 2014.  We will still purchase raw materials from suppliers for our smelter in Montana.


Item 6

We have completed installation of a natural gas pipeline to replace propane as the fuel used in our Mexico smelter.  The pipeline was finished in the fourth quarter of 2014.  We expect the pipeline will reduce our smelter fuel cost by approximately 75%.  Our smelter fuel cost (propane) in Mexico was approximately $700,000 for 2013 and $690,000 using 8 furnaces for the first nine months of 2014.  Our natural gas cost was approximately $125,000 using 12 furnaces for the fourth quarter of 2014.We are proceeding with the installation of a 400 - 500 ton per day flotation mill that we expect to cost between $400,000 and $500,000 to install.  The concrete work for the mill has been completed, and work will be ongoing as we generate cash from operations. This mill will be dedicated to processing ore from the Los Juarez mining property.  We are in a waiting period for approval of permits necessary to process the Los Juarez ore.  We have adequate crushing capacity in place to feed the 500 ton per day mill and the existing mill.When approved, the restart of production from Los Juarez will create a significant increase in our precious metals revenue for 2015 and years forward.Our principal smelter, precious metals recovery operation, and our Company headquarters remain in Montana.  With increased production, we expect to widen our base of customers.Results of OperationsComparison of Years ended December 31, 2014, 2013, and 2012

|  |  | Lbs of Antimony | |  |
| --- | --- | --- | --- | --- |
| Mexico Prodution Activity: |  | Metal Contained | |  |
| Direct Shipping Ore (DSO) |  |  | |  |
| Wadley property |  |  | 425,200 |  |
| Guadalupana area |  |  | 101,261 |  |
| Miscellaneous mines |  |  | 122,944 |  |
| Concentrate from Mill |  |  |  |  |
| Guadalupe |  |  | 48,158 |  |
| Soyatal |  |  | 30,450 |  |
| Total Lbs delivered to Madero |  |  | 728,013 |  |
|  |  |  |  |  |