Gold Resource Corporation Reports First Quarter Results With Net Income of $0.13 per Share; Maintains 2014 Production Outlook
-- Published: Monday, 12 May 2014 | Print | Disqus
COLORADO SPRINGS, CO--(Marketwired - 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
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.
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.
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
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
88,685
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
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
8
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
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