CHAIRMAN’S LETTER

Dear Shareholders:

The year 2016 marked a major financial turnaround for USAC in spite of the lowest antimony prices in seven years. On a Company wide basis, USAC had a negative EBIDTA of $11,325 during 2016. Without a positive adjustment of $914,770, the EBIDTA for 2015 would have been a negative $820,515. For 2016, the average price of antimony was $2.98 per pound, the lowest it has been in seven years. In 2015, the sale price was $3.97 per pound. Production of antimony increased from 2,487,321 pounds in 2015 to a new record of 2,936,886 pounds in 2016, and costs were reduced.

The smelting of custom concentrates from Australia was curtailed in late 2016, and the Company transitioned to smelter feed from its own mines at Wadley in San Luis Potosi, Mexico, and Soyatal in Queretaro, Mexico. Production from the Sierra Guadalupe Mine in Zacetecas will resume later in 2017. Antimony metal from Madero will be shipped directly to customers. This will provide the company with the full benefit of price increases, rather than a small percentage under the custom smelting agreements. Further savings will be realized in processing and trucking. This will reduce the “non-production Mexican” holding costs for all the Company’s mines that have been a cost factor in the past.

The North American supply of sodium antimonite contained 1,369,142 pounds of antimony which produced 1,592,359 pounds of finished oxide, and it contained significant precious metals.

The sale of precious metals from North America in 2016 was a net $672,871 compared to $491,426 in 2015, an increase of $181,445 or 36.9%.

Product 2016 2015 % changeAntimony pounds 2,936,880 2,487,321 +18.1Gold ounces 604.75 89.12 +578.7Silver ounces 38,123.46 30,420.75 +25..3Zeolite tons 13,468 15,268 -11.8

During 2016, a caustic leach plant was installed in Mexico to recover gold and silver from the flotation concentrates from the Los Juarez gold-silver-antimony property in Queretaro, Mexico. Tests of the leach plant were completed in early 2017 and indicated a successful recovery. An application to add a cyanide leach circuit at the Puerto Blanco flotation mill was submitted, and is still being reviewed. The cyanide leach circuit will increase the gold and silver recovery. Further testing of the flotation circuit without the cyanide leach circuit will proceed in 2017 to determine whether the cyanide circuit is necessary.

The Bear River Zeolite (BRZ) in Preston, Idaho realized an EBIDTA of $447,775 in 2016 and a profit of $233,907 compared to an EBIDTA of $732,844 and a profit of $511,403 during 2015. The drop in profitability was a result of selling fewer tons of zeolite, the lack of sales to the oil and gas industry due to lower crude oil prices, and the increased expense of a sales program and product research.

The 2017 outlook for USAC is excellent due to the steady increase in antimony prices, the transition to our own properties in Mexico, and increasing zeolite production. The increased cash flow is expected to fund an increase in Mexican antimony production and the startup of production from the Los Juarez property on a pilot basis. USAC does not claim any reserves as defined by the SEC or Canadian Institute 43-101.

Sincerely, John LawrenceCEO and Chairman

ANTIMONY OPERATIONS

ANTIMONY MARKET

The United States used an estimated 22,000 metric tons (approximately 48,501,000 pounds) of antimony in 2016. Of this amount, 35% went to metal products; primarily storage batteries and ammunition. Approximately 35% went to non-metal products including rubber, glass, and ceramics, and 30% went into flame retardants. The domestic market for USAC antimony products remained strong even though global prices deteriorated in a weak economic environment. In 2016, the U.S. Geological Survey estimated that Chinese production was 202,680 metric tons or 446,828,328 pounds. The Chinese control more than 90% of the world supply, and pricing can be volatile. Pricing of the metal is generally based on the London Metal Exchange average price C.I.F. Rotterdam per metric ton (a metric ton contains 2,204.6 pounds). Antimony oxide contains 83.1% antimony metal and it is typically our preferred product due to its premium pricing.

 The “Mexican excess production costs” include holding costs for Los Juarez, Wadley, Soyatal, Guadalupe, and the Puerto Blanco mill. These costs are included in our production costs and have an important impact on profitability. In 2016, they added $357,706 to the costs of the production of antimony. These costs amounted to $.98 per pound of antimony production from Mexican properties.

WADLEY MINE AND MILL, SAN LUIS POTOSI, MEXICO

According to the U. S. Geological Survey, “by 1943 the ‘San Jose mines have produced more antimony than any other district in Mexico, and they have been surpassed in production by only one or two other deposits in the world.’ ” By 1943, the recorded production was 57,612 metric tons of contained antimony metal. Since that time the mine has probably produced another 25,000 metric tons of metal.

For 2016, we have reduced our lease costs for Wadley by approximately $70,000 from 2015, and raised the mine grade from a minimum of 25% to a minimum of 35%. The operation was in a care and maintenance mode until the end of 2016. We expect Wadley to be the largest producer of Mexican antimony for us by the end of 2017. Currently we have some 80 miners at work. We do not claim any reserves at Wadley as defined by the SEC.

SOYATAL DISTRICT, QUERETARO, MEXICO

The deposit was the third largest antimony producer in Mexico. Donald E. White (U. S. Geological Survey Bulletin 960-B, Antimony Deposits of Soyatal District, State of Queretaro, Mexico, 1948) prepared an extensive report and said “that the production (p. 40) was estimated through 1943 at 25,630 metric tons of metal contained, and production since that time was substantial”. USAC owns the Soyatal District mines. During 2016, Soyatal produced a small amount of DSO (direct shipping ore for the smelter) and concentrates from low grade and dumps. We do not claim any reserves at Soyatal as defined by the SEC.

GUADALUPE, ZACETECAS, MEXICO

The Guadalupe mining property has been on care and maintenance since 2015. In the past, the property was mined extensively by the same company that mined the Wadley and Soyatal mines, but no production records or maps are known. The ore from Guadalupe results in a very high grade concentrate of approximately 65% to 70% antimony. We do not claim any reserves at Guadalupe as defined by the SEC.

PUERTO BLANCO OXIDE/SULFIDE MILL, GUANAJUATO, MEXICO

In 2016, the Puerto Blanco mill processed legacy dump material from our Soyatal property using the oxide circuit, which is less than 10% of plant capacity. The flotation mill will be used in 2017 to process Los Juarez feed on a pilot basis.

MADERO SMELTER, COAHUILA, MEXICO

The Madero smelter produces very high quality antimony from Mexico. The Madero smelter has 17 small furnaces (SRF’s) and one large furnace (LRF). We are presently increasing production from our Mexican mining properties to replace Australian feed. We have installed a caustic leach plant at Madero to improve the recovery of precious metals from Los Juarez concentrates. MONTANA SMELTER, THOMPSON FALLS, MONTANA

The Montana smelter at the USAC corporate headquarters in Thompson Falls, Mt., processes feed from Canadian, Mexican and Australian sources, recovers precious metals, and makes finished antimony oxide and metal.

HILLGROVE MINES, PTY. LTD. ARMIDALE, AUSTRALIA

In 2016, USAC processed concentrates from Hillgrove Mines Pty., Ltd, that contained 58% to 60% antimony and approximately 20 grams (0.64 ounces) of gold per metric ton. In 2016, we receive 47 containers with approximately 960 metric tons of concentrate. Hillgrove has notified us that it has shut down mining in Australia, and that we may receive some concentrates in the

future. We have processed all of the Hillgrove concentrates, and we are waiting to process the remaining Hillgrove slag to recover the remaining antimony and precious metals.

PRECIOUS METALS OPERATIONS

LOS JUAREZ, QUERETARO, MEXICO

USAC has mapped and mined central parts of the mineralized zones at Los Juarez that appear to be vertical breccia pipes over a strike length of 3.5 kilometers with a maximum width of one kilometer. The mineralization is “open” on three sides and to depth. After milling 3,500 metric tons of rock from the Mina Grande pit, the feed grade was determined to be approximately 0.789% antimony, 6.11 ounces of silver (189 grams), and 0.049 ounces of gold (1.52 grams) per metric ton. A shallow but widespread drilling program was started in 2015 to identify the higher grade ore in the deposit. The global average based on these drill holes and rock chip samples was 0.057 ounces (1.77grams) gold, and 2.43 ounces (75.24 grams) silver, and 0.343% antimony per metric ton. To date, less than 5% of the surface area of the property has been drilled. A caustic leach plant was built at Madero during 2015 and 2016 to treat flotation concentrates from Puerto Blanco. An application for a cyanide leach circuit to increase flotation recovery from the flotation tailings at Puerto Blanco is in process.

The anticipated recoveries without the cyanide circuit are as follows:

Metal Assay Recovery Price Value

Gold 0.044opmt 50% $1,150/oz $25.30Silver 3.0 opmt 70% $16.00/oz $33.60Antimony 0.71% 70% $3.40/lb $37.25Total $96.15

Following the successful operation of the 100 ton per day mill at Puerto Blanco and processing at Madero, an additional 400 ton per day mill will be completed and dedicated to Los Juarez ore at either Puerto Blanco or adjacent to the open pit at Los Juarez. We claim no reserves at Los Juarez as defined by the SEC, and the drilling does not comply with Canadian NI 43-101.

CANADIAN SOURCE

Precious metals will be recovered from an off-take agreement with a Canadian source and are sold back to the Canadian producer at a discount.

PRECIOUS METAL PLANT, THOMPSON FALLS MONTANA.

Our precious metal refinery operated in Montana to recover gold from Hillgrove concentrates was in production in 2016. The plant will be used to finish Hillgrove concentrates and begin the processing of Los Juarez concentrates.

ZEOLITE OPERATIONS

During 2016, BRZ sold 13,143 tons compared to 15,901 tons in 2015, down 2,758 tons or 17.3%. BRZ realized a profit of $233,907 in 2016 after depreciation of $213,868 compared to a profit of $511,403 in 2015 after depreciation of $221,441. BRZ’s EBITDA for 2016 was $447,775, compared to an EBITDA of $732,844 for 2015. BRZ has embarked on a sales program with two field representatives and a research person that prepares sales brochures and literature that is gaining new customers. Following are the 2015 applications of BRZ:

Application Percentby dollars

Percentby tons

Animal feed 31.56 29.00Water filtration 14.82 16.20Mine water filtration 19.40 13.10Air filtration 8.70 12.10Soil amendment 7.95 9.10Compost 4.46 6.00Oil field 2.74 3.90Traction 3.70 3.50Waste water filtration 2.23 2.50Miscellaneous 1.30 1.46Synthetic turf 1.00 1.19Odor control 0.85 0.80Landscaping 0.61 0.70Absorption 0.20 0.30Distributors 0.32 0.30Litter 0.35 0.30Distribution 0.33 0.20Pest control 0.25 0.30Pigment 0.08 0.07Total 100 100

Charts and HIGHLIGHTS 2016

All-Time Record Production

Antimony Sales in Pounds 2011 2012 2013 2014 2015 2016

USA 1,179,973 1,031,164 931,789 1,141,436 1,381,971 1,422,957

Mexico 221,450 372,046 647,393 586,368 1,105,350 1,513,923

Total Sale in Pounds 1,401,423 1,403,210 1,579,182 1,727,804 2,487,321 2,936,880

Total sales in Dollars $ 10,406,636 $ 8,753,449 $ 8,375,158 $ 8,132,410 $ 9,863,933 $ 8,744,170

Average price per pound 7.43 6.24 5.30 4.71 3.97 2.98

Precious Metal Sales

Precious Metals SalesSilver/Gold

Montana 2012 2013 2014 2015 2016

102.32 59.74 64.77 89.12 108.10

20,237.70 22,042.46 29,480.22 30,420.75 38,123.46

Revenues $647,554 $347,016 $461,083 $491,426 $556,650 Mexico

1.780

1,053.240

Revenues $22,690 Australian - Hillgrove

496.65

Revenues - Gross $597,309

Ounces Gold Shipped (Au)Ounces Silver Shipped (Ag)

Ounces Gold Shipped (Au)Ounces Silver Shipped (Ag)

Ounces Gold Shipped (Au)

ZEOLITE

BEAR RIVER ZEOLITE

ZEOLITE PRODUCTION 2011 2012 2013 2014 2015 2016Tons Shipped 12,105 12,189 11,182 11,079 15,901 13,143Average Price Per Ton $168.83 $216.73 $196.96 $195.83 $173.17 $188.17 Gross Revenues $2,043,641 $2,641,699 $2,202,414 $2,169,619 $2,753,644 $2,473,094 Net Income $118,185 $313,442 $404,453 $330,671 $511,403 $233,907

ANTIMONY OPERATIONS

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