GOLD RESOURCE CORP - FORM 8-K - EX-99

Attached files

file	filename
8-K - 8-K - GOLD RESOURCE CORP	goro-20141106x8k.htm

GRC-web-top-banner-5.16.13

FOR IMMEDIATE RELEASE NEWS

November 6, 2014 NYSE MKT: GORO

GOLD RESOURCE CORPORATION REPORTS THIRD QUARTER RESULTS;

MAINTAINS 2014 PRODUCTION OUTLOOK

COLORADO SPRINGS – November 6, 2014 – Gold Resource Corporation (NYSE MKT: GORO) (the “Company”) reported production results for the third quarter ended September 30, 2014 of 17,262 ounces precious metal gold equivalent (AuEq) (calculated at actual sales price ratio of 65:1), which generated $21.1 million in revenue for the quarter. Gold Resource Corporation is a gold and silver producer with operations in the southern state of Oaxaca, Mexico. The Company has returned over $100 million to shareholders in monthly dividends since commercial production commenced July 1, 2010, and offers shareholders the option to convert their cash dividends and take delivery in physical gold and silver.

2014 Q3 HIGHLIGHTS

17,262 ounces AuEq mill production

11,923 ounces AuEq sold

5,878 ounces AuEq of high grade gold and silver concentrate produced and stockpiled in ending inventory

$364 total cash cost per ounce AuEq (after by-product credits and including 5% royalty)

52% decrease in total cash cost per ounce AuEq from Q3 2013

$8.8 million Cash Flow from Mine Site Operations

$11.4 million by-product credits, or $960 per ounce AuEq sold

$1.6 million dividend distributions, or $0.03 per share for quarter

$100 million in total dividends returned to shareholders since July 2010

Completion and commissioning of the new Aguila mill Doré Facility

Overview of Q3 2014 El Aguila Project Results

Gold Resource Corporation’s El Aguila Project produced 17,262 ounces AuEq at a total cash cost of $364 per ounce. Realized average metal price sales during the quarter were $1,295 per ounce gold and $20 per ounce silver. The Company recorded a net loss of $(1.5) million, or $(0.03) per share, which if the Company had not stockpiled the 5,878 gold equivalent ounces of the high-grade gold and silver concentrates in its inventory, in preparation for processing in the new Aguila Mill Doré facility, the outcome would have resulted in net income instead of a net loss per share for the three months ended September, 30, 2014. Cash Flow from Mine Site Operations totaled $8.8 million. The Company paid $1.6 million to shareholders in dividends, or $0.03 per share during the quarter. Cash and cash equivalents at quarter end totaled $24.8 million, a 66% increase from December 31, 2013. Realized gold and silver prices increased 4% and 5%, respectively, from the third quarter of 2013.

“The Company delivered weaker than expected quarterly operating results with production levels approximately 24% lower in the quarter compared to the quarterly average of the first half of 2014,” stated Gold Resource Corporation’s CEO and President, Mr. Jason Reid. “The Company has implemented new mine management in

response to these unsatisfactory results and believes that fourth quarter production can rebound, which puts the lower range of the Company’s 2014 Outlook within reach. We stockpiled much of our high-grade gold and silver concentrates produced during the quarter in preparation for pouring Doré bars in our new Doré facility, which we began commissioning at the end of the quarter and which increased our unsold inventories. We recorded a $(0.03) per share loss which was contributed by unsold concentrate inventory as a result of stockpiling the high-grade concentrates for the Doré facility process. These inventoried ounces are planned to be processed and sold during the fourth quarter as Doré bars. By expanding our production methods, we expect to lower our treatment and royalty costs for the Doré ounces sold further optimizing operational costs. Total cash costs of $364 per precious metal gold equivalent ounce sold, calculated after by-product credits and including royalties, was 52% lower than third quarter of 2013 and in line with total cash costs the prior two quarters of this year. Though the third quarter was a challenging one, it was not without some measures of success as we reached a major Company milestone by returning an aggregate of over $100 million dollars back to shareholders in consecutive monthly dividends.”

Below is a table of the key production statistics for our El Aguila Project during the three and nine months ended September 30, 2014 and 2013:



Production and Sales Statistics - La Arista Underground Mine
		Three months ended September 30,				Nine months ended September 30,
		2014		2013		2014		2013
Production Summary
Milled:
Tonnes Milled		79,568		84,017		283,793		232,940
Tonnes Milled per Day		865		913		1,040		853
Grade:
Average Gold Grade (g/t)		2.78		3.67		3.18		3.72
Average Silver Grade (g/t)		291		321		297		338
Average Copper Grade (%)		0.47		0.38		0.40		0.39
Average Lead Grade (%)		2.12		1.09		1.52		1.10
Average Zinc Grade (%)		5.67		2.73		3.97		2.71
Recoveries:
Average Gold Recovery (%)		92		91		92		90
Average Silver Recovery (%)		92		92		92		92
Average Copper Recovery (%)		76		78		78		78
Average Lead Recovery (%)		80		68		76		69
Average Zinc Recovery (%)		85		81		83		78
Mill production (before payable metal deductions)(1)
Gold (ozs.)		6,523		9,063		26,687		24,976
Silver (ozs.)		687,240		796,028		2,506,466		2,321,345
Copper (tonnes)		284		252		891		702
Lead (tonnes)		1,350		627		3,273		1,786
Zinc (tonnes)		3,816		1,851		9,340		4,932
Payable metal sold
Gold (ozs.)		2,932		7,683		19,846		23,934
Silver (ozs.)		575,413		741,757		2,171,298		2,360,655
Copper (tonnes)		228		229		751		728
Lead (tonnes)		1,204		585		2,938		1,724
Zinc (tonnes)		2,976		1,552		7,383		4,467
Average metal prices realized (2)
Gold (oz.)	$	1,295	$	1,240	$	1,287	$	1,437
Silver (oz.)	$	20	$	19	$	20	$	25

Copper (tonne)	$	7,103	$	6,879	$	6,920	$	7,409
Lead (tonne)	$	2,238	$	2,111	$	2,157	$	2,241
Zinc (tonne)	$	2,394	$	1,848	$	2,209	$	1,967
Precious metal gold equivalent ounces produced (mill production)(1)(3)(4)
Gold Ounces		6,523		9,063		26,687		24,976
Gold Equivalent Ounces from Silver		10,739		12,181		38,495		39,172
Total Precious Metal Gold Equivalent Ounces		17,262		21,244		65,182		64,148
Precious metal gold equivalent ounces sold(3)(4)
Gold Ounces		2,932		7,683		19,846		23,934
Gold Equivalent Ounces from Silver		8,991		11,350		33,348		40,064
Total Precious Metal Gold Equivalent Ounces		11,923		19,033		53,194		63,998
Total cash cost (before by-product credits) per precious metal gold equivalent ounce sold (including royalties) (5)	$	1,324	$	1,054	$	958	$	891
Total cash costs, after by-product credits, per precious metal gold equivalent ounce sold (including royalties) (5)	$	364	$	756	$	434	$	609

(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)

Precious metal gold equivalent mill production for the three months ended September 30, 2014 of 17,262 ounces differs from gold equivalent ounces sold for the same period of 11,923 due principally to buyer (smelter) concentrate processing deductions of approximately 1,466 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 3,872 ounces.

(4)

Precious metal gold equivalent mill production for the nine months ended September 30, 2014 of 65,182 ounces differs from gold equivalent ounces sold for the same period of 53,194 principally due to buyer (smelter) concentrate processing deductions of approximately 6,918 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 5,070 ounces.

(5)

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

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.

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 and nine months ended September 30, 2014 and 2013, its financial condition at September 30, 2014 and December 31, 2013 and its cash flows for the nine months ended September 30, 2014 and 2013. The summary data for the three and nine months ended September 30, 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 10-Q and Form 10-K for a complete discussion and reconciliation of the non-GAAP measures.


GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
for the three and nine months ended September 30, 2014 and 2013
(U.S. dollars in thousands, except shares and per share amounts)
(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
		2014		2013		2014		2013

Sales of metals concentrate, net	$	21,052	$	29,405	$	85,873	$	98,375
Mine cost of sales:
Production costs		13,025		17,284		43,107		47,926
Depreciation, depletion and amortization		1,180		717		2,969		1,810
Reclamation and remediation		-		27		-		84
Total mine cost of sales		14,205		18,028		46,076		49,820
Mine gross profit		6,847		11,377		39,797		48,555
Costs and expenses:
General and administrative expenses		4,361		5,478		9,623		13,319
Exploration expenses		2,901		2,062		5,786		8,167
Facilities and mine construction		-		5,721		-		17,375
Total costs and expenses		7,262		13,261		15,409		38,861
Operating (loss) income		(415)		(1,884)		24,388		9,694
Other income (expense)		69		(660)		766		(2,558)
(Loss) Income before income taxes		(346)		(2,544)		25,154		7,136
Provision (benefit) for income taxes		1,109		(714)		12,264		2,953
Net (loss) income	$	(1,455)	$	(1,830)	$	12,890	$	4,183
Other comprehensive (loss) income:
Currency translation gain		-		(22)		-		(33)
Comprehensive (loss) income	$	(1,455)	$	(1,852)	$	12,890	$	4,150
Net (loss) income per common share:
Basic:	$	(0.03)	$	(0.03)	$	0.24	$	0.08
Diluted:	$	-	$	-	$	0.24	$	0.08

Weighted average shares outstanding:
Basic		54,179,369		53,320,673		54,098,783		53,093,288
Diluted		-		-		54,698,748		55,364,417


GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands, except shares)

		September 30,		December 31,
		2014		2013
ASSETS		(Unaudited)
Current assets:
Cash and cash equivalents	$	24,800	$	14,973
Gold and silver bullion		3,615		3,801
Accounts receivable		5,920		2,307
Inventories		9,013		7,468
Income taxes receivable		-		6,488
Deferred tax assets		3,973		3,973
Prepaid expenses and other assets		4,421		5,808
Total current assets		51,742		44,818
Land and mineral rights		227		227
Property, equipment and mine development - net		26,772		18,127
Inventories		903		903
Deferred tax assets		27,663		27,663
Investments (including $3,287 and nil, respectively, measured at fair value)		3,518		231
Total assets	$	110,825	$	91,969
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	5,298	$	2,873
Accrued expenses		5,324		5,613
Capital lease obligations		1,491		1,469
IVA taxes payable		1,147		925
Income taxes payable		5,710		-
Dividends payable		542		538
Total current liabilities		19,512		11,418
Capital lease obligations		1,266		2,387
Reclamation and remediation liabilities		2,804		2,887
Total liabilities		23,582		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		91,987		88,044
Retained earnings/Accumulated (deficit)		2,256		(5,766)
Treasury stock at cost, 336,398 shares		(5,884)		(5,884)
Accumulated other comprehensive (loss)		(1,171)		(1,171)
Total shareholders' equity		87,243		75,277
Total liabilities and shareholders' equity	$	110,825	$	91,969


GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the nine months ended September 30, 2014 and 2013
(U.S. dollars in thousands)
(Unaudited)



		2014		2013

Cash flows from operating activities:
Net income	$	12,890	$	4,183
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation, depletion and amortization		3,107		1,891
Reclamation and remediation		-		84
Stock-based compensation		3,847		5,996
Unrealized foreign currency exchange loss (gain)		545		711
Impairment loss on gold and silver bullion		162		1,743
Unrealized gain due to changes in fair value of investments		(1,504)		-
Deferred tax assets		-		(275)
Changes in operating assets and liabilities:
Accounts receivable		(3,699)		1,267
Inventories		(1,582)		(1,506)
Prepaid expenses and other assets		1,354		(3,727)
Accounts payable		2,059		46
Accrued expenses		(3,007)		3,970
IVA taxes payable/receivable		217		(2,263)
Income taxes payable/receivable		11,907		(8,456)
Net cash provided by operating activities		26,296		3,664
Cash flows from investing activities:
Capital expenditures		(10,524)		(5,891)
Proceeds from sale of building		1,737		-
Purchases of gold and silver bullion		-		(1,002)
Proceeds from conversion of gold and silver bullion		23		1,247
Investments		(1,805)		(231)
Net cash used in investing activities		(10,569)		(5,877)
Cash flows from financing activities:
Proceeds from exercise of stock options		100		545
Dividends paid		(4,868)		(20,674)
Proceeds from capital leases		-		4,219
Repayment of capital leases		(1,099)		-
Net cash used in financing activities		(5,867)		(15,910)
Effect of exchange rates on cash and equivalents		(33)		(23)
Net increase (decrease) in cash and cash equivalents		9,827		(18,146)
Cash and equivalents at beginning of period		14,973		35,780
Cash and equivalents at end of period	$	24,800	$	17,634

Supplemental Cash Flow Information
Interest paid	$	139	$	48
Income taxes paid	$	-	$	11,166

GOLD RESOURCE CORP - FORM 8-K - EX-99 - November 6, 2014

Attached files

GOLD RESOURCE CORP Reports