AUGUST 02, 2000 ---UAMY---
UAMY Profile will be seen by tens of thousands over the next several days. This is a First Alert Profile for you to analyze.
***Aug 2, 2000 United States Antimony Corp. Secures Major Credit Line - Business Wire - 9:35 am
***July 31, 2000 United States Antimony Corp. Announces Major Debt Elimination
...United States Antimony (OTC BB: UAMY)
Recent Price: $0.625
52-Week Range: $0.156-$0.95
Daily Volume (3-month avg): 24.8K
Daily Volume (10-day avg):58K
Shares Outstanding: 17.5 million
Float: 9.8 million
Market Cap: $10.9 million
Target Price: $2 to $3
Company Website: http://www.usantimony.com/
Global Development Advisors, Inc.
Tel (561) 694-9425
Fax (561) 624-1171
- We rate United States Antimony (OTC BB: UAMY) a buy for risk-tolerant investors seeking exposure to a rapidly-growing metal manufacturing company, because we believe that UAMY will generate improving operating profit in 2000 and 2001 as the company executes its strategy. We estimate earnings of $0.06 per share in 2000, improving to $0.25 per share in 2001. The prices for antimony products are at a 35-year low. This creates an opportunity for UAMY, because the company remains a lowest cost producer. The opportunity is in the sale of regular antimony products and especially in specialty products that the company is preparing to produce.
- The UAMY plant has numerous advantages over the competition. There are many technological applications using antimony products. These include cathode ray tubes such as TV and Computer monitor: Additives in epoxy resins for computer chips; Flame retardant additives (FR) in plastics for Mother boards; Flame retardant additives (FR) in all electric wiring insulation; Flame retardant additives (FR) in computer cabinets, telephone cases and many other plastics; Flame retardant additives (FR) in aircraft interiors, vinyl in cars trucks and planes; A catalyst in polyethylene terephthalate (PET). This type of plastic is used for soft drink bottles, boil-in food products, and processed meat packages. PET is currently being use in engineered plastics such as a lightweight car body.
- UAMY is well positioned itself for rapid growth in the near future. 2000 has been a pivotal year for UAMY. In 2000, the company has successfully negotiated a settlement and payoff of a $1.5 million debt through a combination of cash, procured from a line of credit, and equity. The debt service became an issue during a period of record low prices experienced during the first quarter 2000. The debt terms called for a four percent override of gross income from sales, seriously impairing the Company's profitability. Management was able to negotiate a favorable settlement with the lender that should enhance the Company's bottom line. Management says that the elimination of this sizeable obligation is estimated to result in a fiscal 2000 income gain of approximately $850,000. In addition to improved profitability, the elimination of the debt service will provide the company with much needed capital for the expansion of production and debt retirement.
- The company's potential for growth is more evident and could prove significant with the major distribution contracts of its products. Our buy rating is based on the great potential represented by a variety of UAMY's product lines and its unique marketing plan to distribute its product in specific niche segments. The company recorded sales of $5.4 million in 1999 at a time when antimony prices saw record lows. Revenue is projected to grow to $8.1 million in 2000 and to $14.9 million in 2001. The company's financial position has been recently strengthened with the significant reduction in environmental expenses as the remediation and reclamation work at its two gold properties nears completion. The company also settled litigation and judgments payable to third parties totaling in excess of $800,000.
- The antimony trioxide global market is estimated at 175 million to 200 million. The domestic market for antimony trioxide, primarily used as a flame retardant in plastics, is approximately 70 million to 80 million pounds per year. UAMY currently supplies 5% to 6% of the US market, with a smaller proportion of the Canadian and European market. The company's plans include for sodium antimonate, primarily used as a fining agent (degasser) in cathode ray tubes (television bulbs). The sodium antimonite global market is estimated to be 12 million pounds per year with the US representing approximately 7 million to 10 million pounds per year. The market for antimony metal is estimated to be 20 million pounds per year, with the US accounting for 50%. Antimony metal primarily used for bearings, storage batteries, and ordnance is approximately 7 million to 10 million. UAMY is capable of producing a significant portion of the market. However, sales to data have been modest. The company is planning an aggressive marketing program in the area.
- The Company owns 12 patented lode claims and 2 patented mill sites totaling 229 acres located in the Burns Mining District of Sandres County, Montana, approximately 15 mils west of Thompson Falls. The Company's metallurgical facility produces antimony metal, antimony oxide and sodium antimonite from raw materials purchased principally from China and Canada. The company's Thompson Falls plant has several advantages over its domestic competition: (1) UAMY is one of the lowest cost producers in the United States. This advantage should allow the company to increase its market share; (2) UAMY operates one of the newest processing plant in the U.S. with a proprietary furnace design that has several key advantages. The plant produces 4 size grades of antimony oxide and is the only domestic producer of case antimony metal; (3) The company places enormous emphasis on quality control. The control program for its antimony oxide products includes the careful sourcing of raw materials with low impurities, the dedication of one of the 6 production lines to a single product on a customized order, and the detailed monitoring of product color, size and impurities combined with the careful labeling and packaging of products. Composite samples for every production lot are stored in a library for a minimum of 3 years; (4) UAMY continues to emphasize a diverse source of its raw materials, with more than 30% of its feed from sources other than China.
- While the company owns a mining property with well-documented reserves complete with a mill and tailings facility, the operation is closed as it is significantly more profitable to purchase antimony raw materials from foreign sources. We have therefore elected to valued the company's operation as a basic manufacturing company rather than as mining concern. UAMY has been operating at breakeven EPS levels over the last three years. With the focused effort on executing the company's strategy of enhanced sales with the launch of new products and the improvement in the balance sheet, earnings are expected to grow. We estimate earnings of $0.25 per share in 2001, we project the stock price of $2 to $3 in the next 12 month, 8 to 12 x projected earnings, while the industry average PE is about 18. Hence, the stock is rated "buy" for risk-tolerant investors seeking exposure to a rapidly-growing metal manufacturing company.
United States Antimony Corporation (USAC) has produced various antimony products for more than thirty years. Production has been from a large mine reserve of antimony ore in Montana and from other sources. The mine reserve insures a continued supply during periods of international crisis, dock strikes, floods and when foreign sources are unable to meet domestic demand. Additional raw materials supplies are being developed by United States Antimony, Mexico, S.A. de C.V. (USAMSA), a USAC joint venture with a Mexican Corporation from several mines in Mexico.
The manufacturing facility is located near the mine at Thompson Falls, Montana, and the product is warehoused throughout the United States. The plant is unique, because it has the capability of treating a diverse supply of raw material. USAC dedicates a production line to each different product to insure consistent quality. Besides Montana Brand Antimony Oxide VF, MP, HT, and LT, the Company produces antimony metal, sodium antimonate, and a wide variety of antimony specialty compounds. USAC has an ongoing research program for new antimony product development. The Company has focused on the supply of antimony products, and has avoided competing with the consumer in compounding operations.
Founded in 1964 as Agau Mines, Inc., the company was involved in the exploration, development and production of silver and gold in central Idaho.
In 1970, the Company became involved in the mining, milling, and refining of antimony at a large deposit at Thompson Falls. Agau Mines, Inc. was then merged into United States Antimony Corporation ("USAC") in 1971.
Flame retardant applications for coatings, paints and textiles
Paints - Paints can be made flame retardant by providing a halogen, usually chlorinated paraffin or rubber, and 10% to 25% antimony trioxide. Additionally antimony oxide is used as a color "fastener" in paint subject to ultraviolet radiation that tends to deteriorate colors. As a color fastener it is used in yellow striping on highways and in yellow paints for school buses.
Paper - Antimony oxide and a suitable halogen are used to render paper flame retardant. Since antimony oxide is insoluble in water, it has an added advantage over other flame retardants.
Textiles - Modacrylic fibers and halogenated polyesters are rendered flame retardant by using the antimony oxide- halogen synergistic system. Drapes, carpeting, padding, canvas and other textile goods are flame retarded using chlorinated paraffin's and (or) polyvinyl chloride latex and approximately 7% antimony oxide. Rolling, dipping, spraying, brushing, or padding operations applies the halogenated compound and antimony oxide.
Polyester Resins - Antimony oxide is used as a catalyst for the production of polyester resins for fibers and film.
Polyethylene Terephthalate (PET) Resins and Fibers - Antimony oxide is used as a catalyst in the esterification of high-molecular-weight polyethylene terephthalate resins and fibers. High purity grades of Montana Brand Antimony Oxide are available for food applications.
Ceramics - Micropure and high tint are used as opacifiers in vitreous enamel frits. They have the added advantage of acid resistance. Antimony oxide is also used as a brick colorant; it bleaches a red brick to a buff color.
Glass - Antimony oxide is a fining agent (degasser) for glass; especially for television bulbs, optical glass, and in fluorescent light bulb glass. It is used also as a decolorizer in amounts ranging from 0.1% to 2%. A nitrate is also used in conjunction with antimony oxide to help oxidation. It is an antisolorarant (the glass will not change color in sunshine) and is used in heavy plate glass exposed to the sun. Glasses with antimony oxide have excellent light transmitting properties near the infrared end of the spectrum.
Pigment - Besides being used as a flame retardant in paints, it is also used as a pigment that prevents "chalk wash down" in oil base paints.
Chemical Intermediates - Antimony oxide is used as a chemical intermediate for the production of a wide variety of other antimony compounds, i.e. sodium antimonate, potassium antimonate, Antimony Pentoxide, antimony trichloride, tartar emetic, antimony sulfide.
Fluorescent Light Bulbs - Antimony oxide is used as a phosphorescent agent in fluorescent light bulbs.
Lubricants - Antimony oxide is added to fluid lubricants to increase stability. It is also added to molybdenum disulfide to decrease friction and wear.
Flame retardant (FR) theory
Antimony oxide by itself is not a fire retardant, and the halogens by themselves, mainly bromine and chlorine, are weak fire retardants. However, when they are combined they become synergistic and are the most effective and most widely used flame retardant system for plastics. Usually three to four parts of halogenated flame retardants are used to one part of antimony oxide on a weight basis. Using more than the 4:1 ratio offers little additional protection. The stoichiometric ratio of chlorine to antimony in antimony trichloride is 3:1. Formulations in different applications will depend on thermal stability, cost, tinting strength, change in physical properties, smoke considerations, streaking, blend ability, and the flame retardant specification. Two mechanisms exist in the synergistic system. First is the "free radical capture" process that takes place in the vapor phase. On combustion at a temperature over 600° F, the halogen forms hydrochloric or hydrobromic acid that reacts with the antimony oxide to form antimony trichloride, antimony oxychloride, antimony tribromide, or antimony oxybromide. The flame retarding action takes place in the vapor stage above the burning material. It is thought that "free radicals propagate" the flame. But, the antimony trihalides or antimony oxyhalides act as "free radical traps", and take up free radicals. They inhibit ignition and pyrolysis in the solid, liquid, and vapor phases.
A second process occurs in a solid phase and is the "char process". The antimony oxide promotes the formation of "char" (essentially carbon) on the substrate, which reduces volatile gas formation. The barrier between the substrate and the vapor phase reduces the available oxygen to the underlying substrate. Almost any inert additive obtains the barrier effect. In plastics there is a cross linking with antimony to produce a more stable thermoset polymer. Additionally in the solid phase, the formation of SbCl3 and SbOCl acts as a dehydrating agent that increases charring. Sometimes phosphorous compounds (TCP), magnesium oxide, alumina trihydrate, molybdic oxide, zinc borate, or zinc oxide are used in combination or in place of antimony oxide to reduce costs, to increase char formation, or to reduce smoke. However, the substitution of the other retardants greatly reduces the flame retardance normally rendered by antimony oxide. Testing of the amounts of the halogen and antimony oxide in each formulation is necessary to optimize the flame retardance and lower costs. Alumina trihydrate is not synergistic with halogenated flame retardants. It functions as a flame retardant by the release of its water of hydration and cannot be used in high temperature processes. Zinc borate, molybdic oxide, zinc oxide, and magnesium oxide can be used in conjunction with antimony oxide to augment char formation and decrease smoke. Replacement of the antimony oxide to meet a smoke requirement compromises the flame retardance. However, when Sodium Antimonate is substituted at a ratio of 70 - 90% Antimony Trioxide to 10 - 30% Sodium Antimonate provides a flame retardant with smoke suppressant properties is created.
A relationship exists between particle size and tinting strength. If the particles are very fine (less than 300 nanometers) they are below the visual range and there is no tint strength. However, within the visual range, the smaller the particle size, the higher the tint strength. Or conversely, the larger the particle size, the lower the tint strength.
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