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FOR IMMEDIATE RELEASE                                                                                                NEWS

May 12, 2014                                                                                                   NYSE MKT: GORO

GOLD RESOURCE CORPORATION REPORTS FIRST QUARTER RESULTS WITH NET INCOMEOF $0.13 PER SHARE; MAINTAINS 2014 PRODUCTION OUTLOOK

 

COLORADO SPRINGS – May 12,  2014 –  Gold Resource Corporation (NYSE MKT: GORO) (the “Company”) reported its production results for the first quarter ended March 31, 2014 of 23,734 ounces precious metal gold equivalent (calculated at actual sales price ratio of 64:1)  while decreasing its total cash cost by 18% over the first quarter of 2013. Gold Resource Corporation is a gold and silver producer with operations in the southern state of Oaxaca, Mexico.  The Company has returned over $96  million to shareholders in monthly dividends since commercial production July 1, 2010, and offers shareholders the option to convert their cash dividends into physical gold and silver and take delivery.

2014 Q1 HIGHLIGHTS

·

23,734 ounces mill production, precious metal gold equivalent

·

20,600 precious metal gold equivalent ounces sold

·

Total cash cost of $422 per precious metal gold equivalent ounce (including 5% royalty)

·

Total cash cost decrease of 18% from Q1 2013 and 38% since Q4 2013

·

$17.4 million Cash Flow from Mine Site Operations

·

Net income of $7.1 million, or $0.13 per share

·

Dividend distributions of $1.6 million, or $0.03 per share for quarter

·

Cash and Cash Equivalents increased $4.5 million from  prior quarter

·

1,159 tonnes milled per day, a 28% increase from Q4 2013

Overview of Q1 2014 El Aguila Project Results

Gold Resource Corporation’s El Aguila Project produced 23,734 ounces of precious metal gold equivalent at a total cash cost of $422 per ounce. Realized average metal price sales during the quarter were $1,296 per ounce gold and $20 per ounce silver.  Net income totaled $7.1 million, or $0.13 per share.  Cash Flow from Mine Site Operations totaled $17.4 million.  The Company paid $1.6 million to shareholders in dividends or $0.03 per share during the quarter.  Gold and silver prices decreased 21.4% and 35.5%, respectively, from the first quarter of 2013.

“During the first quarter, the Company delivered strong operating results with production increasing 15% over the prior quarter,” stated Gold Resource Corporation’s CEO and President, Mr. Jason Reid.  “Equally important, we substantially drove down our total cash costs by 38% compared to the fourth quarter of 2013.  In addition, we continued to distribute our monthly dividend and increased our treasury by $4.5 million over the prior quarter.  With a strong first quarter, the Company is on track to meet its annual production outlook goal.”

Mr. Reid continued, “In the face of volatile precious metal prices, Gold Resource Corporation has demonstrated it can generate significant profits, build its treasury, and continue to reward shareholders through dividend

 


 

 

distributions.  We will continue to challenge our team to identify additional cost savings opportunities at our operations while increasing future production.”

Below is a table of the key production statistics for our El Aguila Project during the three months ended March 31, 2014 and 2013.

 

 

 

 

 

 

 

 

 

 

 

Production and Sales Statistics - La Arista Underground Mine

 

 

Three months ended March 31,

 

 

2014

 

2013

Production Summary

 

 

 

 

Milled:

 

 

 

 

Tonnes Milled

 

104,349 

 

76,184 

Tonnes Milled per Day

 

1,159 

 

846 

Grade:

 

 

 

 

Average Gold Grade (g/t)

 

3.25 

 

3.67 

Average Silver Grade (g/t)

 

285 

 

345 

Average Copper Grade (%)

 

0.35 

 

0.39 

Average Lead Grade (%)

 

1.23 

 

1.10 

Average Zinc Grade (%)

 

3.43 

 

2.79 

Recoveries:

 

 

 

 

Average Gold Recovery (%)

 

91 

 

88 

Average Silver Recovery (%)

 

92 

 

92 

Average Copper Recovery (%)

 

80 

 

84 

Average Lead Recovery (%)

 

72 

 

70 

Average Zinc Recovery (%)

 

82 

 

79 

Mill production (before payable metal deductions)(1)

 

 

 

 

Gold (ozs.)

 

9,958 

 

7,898 

Silver (ozs.)

 

878,958 

 

777,671 

Copper (tonnes)

 

292 

 

248 

Lead (tonnes)

 

929 

 

586 

Zinc (tonnes)

 

2,920 

 

1,676 

Payable metal sold

 

 

 

 

Gold (ozs.)

 

8,586 

 

8,953 

Silver (ozs.)

 

766,535 

 

863,152 

Copper (tonnes)

 

259 

 

305 

Lead (tonnes)

 

812 

 

642 

Zinc (tonnes)

 

2,158 

 

1,735 

Average metal prices realized (2)

 

 

 

 

Gold (oz.)

$

1,296 

$

1,648 

Silver (oz.)

$

20 

$

31 

Copper (tonne)

$

6,939 

$

7,996 

Lead (tonne)

$

2,091 

$

2,448 

Zinc (tonne)

$

2,050 

$

2,154 

Precious metal gold equivalent ounces produced (mill production)(1)(4)

 

 

 

 

Gold Ounces

 

9,958 

 

7,898 

Gold Equivalent Ounces from Silver

 

13,776 

 

14,432 

Total Precious Metal Gold Equivalent Ounces

 

23,734 

 

22,330 

Precious metal gold equivalent ounces sold(3)(4)

 

 

 

 

Gold Ounces

 

8,586 

 

8,953 

Gold Equivalent Ounces from Silver

 

12,014 

 

16,019 

Total Precious Metal Gold Equivalent Ounces

 

20,600 

 

24,972 

2

 


 

 

Total cash cost (before by-product credits) per precious metal gold equivalent ounce sold (including royalties) (3)

$

806 

$

825 

Total cash costs, after by-product credits, per precious metal gold equivalent ounce sold (including royalties) (3)

$

422 

$

515 

 

(1)

Mill production represents metal contained in concentrates produced at the mill, which is before payable metal deductions are levied by the buyer of our concentrates. Payable metal deduction quantities are defined in our contracts with the buyer of our concentrates and represent an estimate of metal contained in the concentrates produced at our mill, for which the buyer cannot recover through the smelting process. There are inherent limitations and differences in the sampling method and assaying of estimated metal contained in concentrates that are shipped, and those contained metal estimates derived from sampling methods and assaying throughout the mill production process.  The Company monitors these differences to ensure that precious metal mill production quantities are materially correct.

(2)

Average metal prices realized vary from the market metal prices due to out of period settlement adjustments from our provisional invoices when they are settled. Our average metal prices realized will therefore differ from the market average metal prices in most cases.

(3)

A reconciliation of this Non-GAAP measure to total mine cost of sales, the most comparable U.S. GAAP measure, can be found below in “Non-GAAP Measures.    

(4)

Precious metal gold equivalent mill production for the first quarter of 2014 of 23,734 ounces differs from gold equivalent ounces sold for the same period of 20,600 due principally to buyer (smelter) concentrate processing deductions of approximately 2,123 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 1,011 ounces.

 

 

About GRC:

Gold Resource Corporation is a mining company focused on production and pursuing development of gold and silver projects that feature low operating costs and produce high returns on capital.  The Company has 100% interest in six potential high-grade gold and silver properties in Mexico’s southern state of Oaxaca.  The Company has 54,179,369 shares outstanding and no warrants.  Gold Resource Corporation offers shareholders the option to convert their cash dividends into physical gold and silver and take delivery.  For more information, please visit GRC’s website, located at www.Goldresourcecorp.com and read the Company’s 10-K for an understanding of the risk factors involved.

Cautionary Statements:

This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. When used in this press release, the words “plan”, “target”, "anticipate," "believe," "estimate," "intend" and "expect" and similar expressions are intended to identify such forward-looking statements. Such forward-looking statements include, without limitation, the statements regarding Gold Resource Corporation’s strategy, future plans for production, future expenses and costs, future liquidity and capital resources, and estimates of mineralized material. All forward-looking statements in this press release are based upon information available to Gold Resource Corporation on the date of this press release, and the company assumes no obligation to update any such forward-looking statements. Forward looking statements involve a number of risks and uncertainties, and there can be no assurance that such statements will prove to be accurate. The Company's actual results could differ materially from those discussed in this press release. In particular, there can be no assurance that production will continue at any specific rate.  Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the Company’s 10-K filed with the SEC.

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Contacts:

Corporate Development

Greg Patterson

303-320-7708

www.Goldresourcecorp.com 

See Accompanying Tables

 

The following information summarizes the results of operations for Gold Resource Corporation for the three months ended March 31, 2014 and 2013, its financial condition at March 31, 2014 and December 31, 2013 and its cash flows for the three months ended March 31, 2014 and 2013.  The summary data for the three months ended March 31, 2014 is unaudited; the summary data for the year ended December 31, 2013 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2013, but do not include the footnotes and other information that is included in the complete financial statements.  Readers are urged to review the Company’s Form 10-K in its entirety, which can be found on the SEC's website at www.sec.gov.

The calculation of our cash cost per ounce contained in this press release is a non-GAAP financial measure.  Please see "Management's Discussion and Analysis and Results of Operation" contained in the Company’s most recent Form 10Q and Form 10-K. 

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GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

for the three months ended March 31, 2014 and 2013

(U.S. dollars in thousands, except shares and per share amounts)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

 

 

 

 

 

Sales of metals concentrate, net

$

31,152 

$

42,311 

Mine cost of sales:

 

 

 

 

Production costs

 

14,221 

 

16,867 

Depreciation and amortization

 

745 

 

536 

Reclamation and remediation

 

 -

 

29 

Total mine cost of sales

 

14,966 

 

17,432 

Mine gross profit

 

16,186 

 

24,879 

Costs and expenses:

 

 

 

 

General and administrative expenses

 

3,013 

 

4,385 

Exploration expenses

 

1,288 

 

3,299 

Facilities and mine construction

 

 -

 

4,848 

Total costs and expenses

 

4,301 

 

12,532 

Operating income

 

11,885 

 

12,347 

Other income (expense)

 

469 

 

(36)

Income before income taxes

 

12,354 

 

12,311 

Provision for income taxes

 

5,229 

 

4,924 

Net income

$

7,125 

$

7,387 

Other comprehensive income:

 

 

 

 

Currency translation gain

 

 -

 

34 

Comprehensive income

$

7,125 

$

7,421 

Net income per common share:

 

 

 

 

Basic:

$

0.13 

$

0.14 

Diluted:

$

0.13 

$

0.13 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

53,934,925 

 

52,679,369 

Diluted

 

54,697,710 

 

55,586,031 

 

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GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

(U.S. dollars in thousands, except shares)

(Unaudited)

 

 

 

 

 

 

 

March 31,

 

December 31,

 

 

2014

 

2013

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash and cash equivalents

$

19,457 

$

14,973 

Gold and silver bullion

 

3,793 

 

3,801 

Accounts receivable

 

6,442 

 

2,307 

Inventories

 

6,967 

 

7,468 

Income taxes receivable

 

1,216 

 

6,488 

Deferred tax assets

 

3,973 

 

3,973 

Prepaid expenses and other assets

 

4,687 

 

5,808 

Total current assets

 

46,535 

 

44,818 

Land and mineral rights

 

227 

 

227 

Property, equipment and mine development - net

 

21,506 

 

18,127 

Inventories

 

903 

 

903 

Deferred tax assets

 

27,663 

 

27,663 

Investments (including $2,512 and nil, respectively, measured at fair value)

 

2,743 

 

231 

Total assets

$

99,577 

$

91,969 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

$

4,223 

$

2,873 

Accrued expenses

 

5,011 

 

5,613 

Capital lease obligations

 

1,476 

 

1,469 

IVA taxes payable

 

1,762 

 

925 

Dividends payable

 

542 

 

538 

Total current liabilities

 

13,014 

 

11,418 

Capital lease obligations

 

2,015 

 

2,387 

Reclamation and remediation liabilities

 

2,883 

 

2,887 

Total liabilities

 

17,912 

 

16,692 

Shareholders' equity:

 

 

 

 

Preferred stock - $0.001 par value, 5,000,000 shares authorized:

 

 

 

 

no shares issued and outstanding

 

 -

 

 -

Common stock - $0.001 par value, 100,000,000 shares authorized:

 

 

 

 

54,515,767 and  54,115,767 shares issued and outstanding, respectively

 

55 

 

54 

Additional paid-in capital

 

88,665 

 

88,044 

Accumulated (deficit)

 

 -

 

(5,766)

Treasury stock at cost, 336,398 shares

 

(5,884)

 

(5,884)

Accumulated other comprehensive (loss)

 

(1,171)

 

(1,171)

Total shareholders' equity

 

81,665 

 

75,277 

Total liabilities and shareholders' equity

$

99,577 

$

91,969 

 

 

 

 

 

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GOLD RESOURCE CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

for the three months ended March 31, 2014 and 2013

(U.S. dollars in thousands)

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

 

2013

 

 

 

 

 

Cash flows from operating activities:

 

 

 

 

Net income

$

7,125 

$

7,387 

Adjustments to reconcile net income to net cash

 

 

 

 

from operating activities:

 

 

 

 

Depreciation and amortization

 

810 

 

653 

Reclamation and remediation 

 

 -

 

29 

Stock-based compensation

 

783 

 

1,512 

Unrealized foreign currency exchange loss (gain)

 

137 

 

(119)

Impairment loss on gold and silver bullion

 

 -

 

178 

Unrealized gain due to changes in fair value of investments

 

(702)

 

 -

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

(4,176)

 

(4,887)

Inventories

 

496 

 

942 

Prepaid expenses and other assets

 

1,110 

 

(1,677)

Accounts payable

 

1,331 

 

1,910 

Accrued expenses

 

(608)

 

1,469 

IVA taxes payable/receivable

 

828 

 

(1,216)

Income taxes payable/receivable

 

5,219 

 

263 

Net cash provided by operating activities

 

12,353 

 

6,444 

Cash flows from investing activities:

 

 

 

 

Capital expenditures

 

(4,190)

 

(3,682)

Purchases of gold and silver bullion

 

 -

 

(485)

Proceeds from conversion of gold and silver bullion

 

 

664 

Investments

 

(1,805)

 

(231)

Net cash used in investing activities

 

(5,987)

 

(3,734)

Cash flows from financing activities:

 

 

 

 

Proceeds from exercise of stock options

 

100 

 

 -

Dividends paid

 

(1,617)

 

(9,482)

Repayment of capital leases

 

(365)

 

 -

Net cash used in financing activities

 

(1,882)

 

(9,482)

Effect of exchange rates on cash and equivalents

 

 -

 

18 

Net increase (decrease) in cash and cash equivalents

 

4,484 

 

(6,754)

Cash and equivalents at beginning of period

 

14,973 

 

35,780 

Cash and equivalents at end of period

$

19,457 

$

29,026 

 

 

 

 

 

Supplemental Cash Flow Information

 

 

 

 

Interest paid

$

85 

$

 -

Income taxes paid

$

 -

$

3,496 

 

 

 

 

 

7