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Gold Resource Corporation Reports Second Quarter Net Income of $7.8 Million, or $0.14 per Share; Maintains 2014 Production Outlook

 -- Published: Thursday, 7 August 2014 | Print  | Disqus 

COLORADO SPRINGS, CO--(Marketwired - Aug 7, 2014) - Gold Resource Corporation (NYSE MKT: GORO) (the "Company") reported production results for the second quarter ended June 30, 2014 of 24,172 ounces precious metal gold equivalent (AuEq) (calculated at actual sales price ratio of 67:1), which generated $33.7 million in revenues and net income of $7.8 million for the quarter, while decreasing its total cash cost per ounce AuEq by 32% over the second 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 $98 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 Q2 HIGHLIGHTS

  • 24,172 ounces AuEq mill production
  • 20,647 ounces AuEq sold
  • $438 total cash cost per ounce AuEq (after by-product credits and including 5% royalty)
  • 32% decrease in total cash cost per ounce AuEq from Q2 2013
  • $19.4 million Cash Flow from Mine Site Operations
  • $7.8 million net income, or $0.14 per share
  • $1.6 million dividend distributions, or $0.03 per share for quarter
  • $10.2 million Cash and Cash Equivalents increase from prior quarter to $29.6 million
  • 1,098 tonnes milled per day, a 27% increase over 2013 annual average
  • $8.5 million by-product credits, or $411 per ounce AuEq sold

Overview of Q2 2014 El Aguila Project Results

Gold Resource Corporation's El Aguila Project produced 24,172 ounces AuEq at a total cash cost of $438 per ounce. Realized average metal price sales during the quarter were $1,276 per ounce gold and $19 per ounce silver. Net income totaled $7.8 million, or $0.14 per share. Cash Flow from Mine Site Operations totaled $19.4 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 $29.6 million, increasing 98% during the first six months of 2014. Gold and silver prices decreased 7.9% and 17.4%, respectively, from the second quarter of 2013.

"The Company delivered strong second quarter operating results with production increasing 2% compared to first quarter, and increasing 17% over second quarter of 2013," stated Gold Resource Corporation's CEO and President, Mr. Jason Reid. "Total cash costs of $438 per precious metal gold equivalent ounce sold, calculated after by-product credits and including royalties, was 32% lower than second quarter of 2013. The Aguila Project continues to generate profits even in today's lower precious metal price environment, allowing the Company to invest in its Oaxaca Mining Unit, build its treasury, and distribute monthly dividends to our shareholders. The Company remains on track to meet its annual production outlook of 85,000 to 100,000 ounces of precious metal gold equivalent."

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

         
         
Production and Sales Statistics - La Arista Underground Mine
 
  Three months ended
June 30,
 Six months ended
June 30,
  2014 2013 2014 2013
Production Summary            
Milled:            
 Tonnes Milled  99,876  72,740  204,225  148,924
 Tonnes Milled per Day  1,098  808  1,128  823
Grade:            
 Average Gold Grade (g/t)  3.41  3.83  3.33  3.75
 Average Silver Grade (g/t)  315  349  300  347
 Average Copper Grade (%)  0.40  0.38  0.37  0.39
 Average Lead Grade (%)  1.34  1.12  1.28  1.11
 Average Zinc Grade (%)  3.18  2.61  3.31  2.70
Recoveries:            
 Average Gold Recovery (%)  93  90  92  89
 Average Silver Recovery (%)  93  92  92  92
 Average Copper Recovery (%)  79  72  79  78
 Average Lead Recovery (%)  75  70  73  70
 Average Zinc Recovery (%)  82  74  82  77
Mill production (before payable metal deductions)(1)            
 Gold (ozs.)  10,205  8,015  20,163  15,913
 Silver (ozs.)  940,268  747,646  1,819,226  1,525,317
 Copper (tonnes)  314  202  606  450
 Lead (tonnes)  994  573  1,923  1,159
 Zinc (tonnes)  2,603  1,405  5,523  3,081
Payable metal sold            
 Gold (ozs.)  8,328  7,297  16,914  16,250
 Silver (ozs.)  829,351  755,746  1,595,886  1,618,898
 Copper (tonnes)  264  194  523  499
 Lead (tonnes)  922  496  1,734  1,139
 Zinc (tonnes)  2,249  1,180  4,407  2,915
Average metal prices realized (2)            
 Gold (oz.) $1,276 $1,386 $1,286 $1,530
 Silver (oz.) $19 $23 $20 $27
 Copper (tonne) $6,742 $7,114 $6,840 $7,652
 Lead (tonne) $2,109 $2,127 $2,101 $2,308
 Zinc (tonne) $2,116 $1,848 $2,083 $2,030
Precious metal gold equivalent ounces produced (mill production)(1)(4)(5)            
 Gold Ounces  10,205  8,015  20,163  15,913
 Gold Equivalent Ounces from Silver  13,967  12,559  27,733  27,086
 Total Precious Metal Gold Equivalent Ounces  24,172  20,574  47,896  42,999
Precious metal gold equivalent ounces sold(3)(4)(5)            
 Gold Ounces  8,328  7,297  16,914  16,250
 Gold Equivalent Ounces from Silver  12,319  12,695  24,327  28,748
 Total Precious Metal Gold Equivalent Ounces  20,647  19,992  41,241  44,998
 Total cash cost (before by-product credits) per precious metal gold equivalent ounce sold (including royalties) (3) $849 $876 $828 $822
 Total cash costs, after by-product credits, per precious metal gold equivalent ounce sold (including royalties) (3) $438 $645 $430 $547
  
(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 in Management's Discussion and Analysis contained in the report on Form 10-Q for the period ended June 30, 2014 filed with the Securities and Exchange Commission.
(4)Precious metal gold equivalent mill production for the three months ended June 30, 2014 of 24,172 ounces differs from gold equivalent ounces sold for the same period of 20,647 due principally to buyer (smelter) concentrate processing deductions of approximately 3,341 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 184 ounces.
(5)Precious metal gold equivalent mill production for the six months ended June 30, 2014 of 47,896 ounces differs from gold equivalent ounces sold for the same period of 41,241 principally due to buyer (smelter) concentrate processing deductions of approximately 5,459 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 1,196 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 and six months ended June 30, 2014 and 2013, its financial condition at June 30, 2014 and December 31, 2013 and its cash flows for the six months ended June 30, 2014 and 2013. The summary data for the three and six months ended June 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 six months ended June 30, 2014 and 2013 
(U.S. dollars in thousands, except shares and per share amounts) 
(Unaudited) 
           
           
  Three months ended
June 30,
  Six months ended
June 30,
 
  2014 2013  2014 2013 
               
Sales of metals concentrate, net $33,669 $26,660  $64,821 $68,971 
Mine cost of sales:              
 Production costs  14,801  14,931   29,021  30,642 
 Depreciation and amortization  1,044  557   1,789  1,093 
 Reclamation and remediation  -  28   -  57 
  Total mine cost of sales  15,845  15,516   30,810  31,792 
Mine gross profit  17,824  11,144   34,011  37,179 
Costs and expenses:              
 General and administrative expenses  2,249  3,457   5,262  7,842 
 Exploration expenses  1,597  2,806   2,885  6,105 
 Facilities and mine construction  -  5,649   -  11,654 
  Total costs and expenses  3,846  11,912   8,147  25,601 
Operating income (loss)  13,978  (768)  25,864  11,578 
Other income (expense)  214  (1,862)  683  (1,898)
Income (loss) before income taxes  14,192  (2,630)  26,547  9,680 
 Provision (benefit) for income taxes  6,384  (1,257)  11,613  3,667 
Net income (loss) $7,808 $(1,373) $14,934 $6,013 
Other comprehensive income (loss):              
 Currency translation gain  -  (45)  -  (11)
Comprehensive income (loss) $7,808 $(1,418) $14,934 $6,002 
Net income (loss) per common share:              
 Basic: $0.14 $(0.03) $0.28 $0.11 
 Diluted: $0.14 $(0.03) $0.27 $0.11 
               
Weighted average shares outstanding:              
 Basic  54,179,369  53,272,776   54,057,822  52,977,712 
 Diluted  54,556,217  53,272,776   54,629,512  55,434,474 
                
                
      
GOLD RESOURCE CORPORATION 
CONDENSED CONSOLIDATED BALANCE SHEETS 
(U.S. dollars in thousands, except shares) 
      
 June 30,  December 31, 
 2014  2013 
ASSETS(Unaudited)    
Current assets:       
 Cash and cash equivalents$29,627  $14,973 
 Gold and silver bullion 3,785   3,801 
 Accounts receivable 6,083   2,307 
 Inventories 6,358   7,468 
 Income taxes receivable -   6,488 
 Deferred tax assets 3,973   3,973 
 Prepaid expenses and other assets 5,374   5,808 
  Total current assets 55,200   44,818 
Land and mineral rights 227   227 
Property, equipment and mine development - net 24,508   18,127 
Inventories 903   903 
Deferred tax assets 27,663   27,663 
Investments (including $2,710 and nil, respectively, measured at fair value) 2,941   231 
  Total assets$111,442  $91,969 
LIABILITIES AND SHAREHOLDERS' EQUITY       
Current liabilities:       
 Accounts payable$4,773  $2,873 
 Accrued expenses 4,796   5,613 
 Capital lease obligations 1,484   1,469 
 IVA taxes payable 1,131   925 
 Income taxes payable 5,161   - 
 Dividends payable 542   538 
  Total current liabilities 17,887   11,418 
Capital lease obligations 1,641   2,387 
Reclamation and remediation liabilities 2,894   2,887 
  Total liabilities 22,422   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 90,095   88,044 
Retained earnings/Accumulated (deficit) 5,925   (5,766)
Treasury stock at cost, 336,398 shares (5,884)  (5,884)
Accumulated other comprehensive (loss) (1,171)  (1,171)
  Total shareholders' equity 89,020   75,277 
  Total liabilities and shareholders' equity$111,442  $91,969 
        
      
GOLD RESOURCE CORPORATION 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 
for the six months ended June 30, 2014 and 2013 
(U.S. dollars in thousands) 
(Unaudited) 
      
   
   
 2014  2013 
        
Cash flows from operating activities:       
 Net income$14,934  $6,013 
 Adjustments to reconcile net income to net cash from operating activities:       
  Depreciation and amortization 1,895   1,188 
  Reclamation and remediation -   57 
  Stock-based compensation 1,956   3,690 
  Unrealized foreign currency exchange loss (gain) 10   217 
  Impairment loss on gold and silver bullion -   1,743 
  Unrealized gain due to changes in fair value of investments (802)  - 
 Changes in operating assets and liabilities:       
  Accounts receivable (3,796)  3,086 
  Inventories 1,104   363 
  Prepaid expenses and other assets 433   (2,250)
  Accounts payable 1,588   1,642 
  Accrued expenses (1,359)  1,682 
  IVA taxes payable/receivable 204   (370)
  Income taxes payable/receivable 11,588   (6,081)
 Net cash provided by operating activities 27,755   10,980 
Cash flows from investing activities:       
 Capital expenditures (7,438)  (5,113)
 Purchases of gold and silver bullion -   (806)
 Proceeds from conversion of gold and silver bullion 16   1,048 
 Investments (1,805)  (231)
 Net cash used in investing activities (9,227)  (5,102)
Cash flows from financing activities:       
 Proceeds from exercise of stock options 100   150 
 Dividends paid (3,243)  (15,876)
 Proceeds from capital leases -   4,501 
 Repayment of capital leases (731)  - 
 Net cash used in financing activities (3,874)  (11,225)
Effect of exchange rates on cash and equivalents -   (19)
Net increase (decrease) in cash and cash equivalents 14,654   (5,366)
Cash and equivalents at beginning of period 14,973   35,780 
Cash and equivalents at end of period$29,627  $30,414 
        
Supplemental Cash Flow Information       
Interest paid$96  $- 
Income taxes paid$-  $9,823 
Contact:

Corporate Development
Greg Patterson
303-320-7708
www.Goldresourcecorp.com

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 -- Published: Thursday, 7 August 2014 | E-Mail  | Print  | Source: GoldSeek.com

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