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Gold Resource Corporation Reports Third Quarter Results, Maintains 2018 Production Outlook

 -- Published: Tuesday, 30 October 2018 | Print  | Disqus 

COLORADO SPRINGS, Colo., Oct. 30, 2018 (GLOBE NEWSWIRE) -- Gold Resource Corporation (NYSE American: GORO) (the “Company” or “GRC”) reported production results for the third quarter ended September 30, 2018 of 6,411 ounces of gold and 321,590 ounces of silver, which along with base metal revenue generated $24.3 million in net revenue for the quarter.  Gold Resource Corporation is a gold and silver producer, developer and explorer with operations in Oaxaca, Mexico and Nevada, U.S.A.  The Company has returned $111 million to its shareholders in monthly dividends since commercial production commenced July 1, 2010 and offers its shareholders the option to convert their cash dividends into physical gold and silver and take delivery.

Q3 2018 HIGHLIGHTS

  • $24.3 million net sales
  • 6,411 gold ounces produced
  • 321,590 silver ounces produced
  • $582 total cash cost per precious metal gold equivalent ounce sold (after by-product credits)
  • $13.0 million base metal by-product credits, or $1,372 per precious metal gold equivalent ounce sold
  • $0.3 million dividend distributions, or $0.005 per share for quarter
  • $16.6 million cash and cash equivalents
  • $3.4 million gold and silver bullion
  • Heap leach pad construction 80% complete at Isabella Pearl Project, Nevada
  • First ore blast at Isabella Pearl Project, Nevada in September 2018

Overview of Q3 2018 Results

During the third quarter of 2018, the Company sold 9,466 precious metal gold equivalent ounces at a total cash cost of $582 per ounce (after by-product credits). Average realized metal prices during the quarter included $1,183 per ounce gold and $14.69 per ounce silver*. The Company recorded a net loss of ($0.8 million), or ($0.01) per share, driven primarily by lower commodity prices and unfavorable price settlements of prior period sales. Declining metal prices during the prior four months caused adjustments under the provisional pricing mechanism in the Company’s sales contracts to aggregate a negative settlement of $3.2 million in final payments during the third quarter.

The Company paid $0.3 million to its shareholders in dividends, or $0.005 per share during the quarter. Cash and cash equivalents at quarter end totaled $16.6 million.

Production totals for the first nine months of 2018 included 18,864 ounces of gold, 1,341,429 ounces of silver, 1,206 tonnes of copper, 5,274 tonnes of lead and 14,236 tonnes of zinc. The Company maintains its 2018 Annual Outlook, targeting a plus or minus 10 percent production of 27,000 gold ounces and 1,700,000 silver ounces.

*Average realized metal prices include final settlement adjustments for previously unsettled provisional sales.  Provisional sales may remain unsettled from one quarter into the next.  Realized prices will therefore vary from average spot metal market prices upon final settlement.

The following Production Statistics table summarizes certain information about our mining operations for three and nine months ended September 30, 2018 and 2017:

             
  Three months ended
September 30, 
 Nine months ended
September 30, 
  2018 2017 2018 2017
Arista Mine            
Milled            
Tonnes Milled   143,110   108,109   410,697   283,258
Grade            
Average Gold Grade (g/t)   1.51   2.16   1.64   2.20
Average Silver Grade (g/t)   72   120   106   140
Average Copper Grade (%)   0.37   0.36   0.37   0.37
Average Lead Grade (%)   1.82   1.76   1.64   1.63
Average Zinc Grade (%)   4.21   5.14   4.23   4.25
Recoveries            
Average Gold Recovery (%)   80   85   79   86
Average Silver Recovery (%)   91   92   91   92
Average Copper Recovery (%)   82   75   79   77
Average Lead Recovery (%)   81   76   78   77
Average Zinc Recovery (%)   83   83   82   84
Aguila Open Pit Mine            
Milled            
Tonnes Milled   11,404   2,108   25,730   42,079
Grade            
Average Gold Grade (g/t)   2.30   1.02   2.11   1.52
Average Silver Grade (g/t)   39   41   41   34
Recoveries            
Average Gold Recovery (%)   86   71   83   73
Average Silver Recovery (%)   76   65   80   80
Mirador Mine            
Milled            
Tonnes Milled   3,561   3,330   11,244   3,330
Grade            
Average Gold Grade (g/t)   1.41   1.08   1.40   1.08
Average Silver Grade (g/t)   105   102   158   102
Recoveries            
Average Gold Recovery (%)   81   62   75   62
Average Silver Recovery (%)   65   54   76   54
Combined            
Tonnes milled   158,075   113,547   447,671   328,667
Tonnes Milled per Day (1)   1,796   1,336   1,724   1,279
Metal production (before payable metal deductions) (2)            
Gold (ozs.)   6,411   6,465   18,864   18,908
Silver (ozs.)   321,590   392,153   1,341,429   1,217,713
Copper (tonnes)   434   291   1,206   804
Lead (tonnes)   2,119   1,449   5,274   3,583
Zinc (tonnes)   4,970   4,628   14,236   11,447
Precious metal gold equivalent ounces produced (mill production) (2)            
Gold Ounces   6,411   6,465   18,864   18,908
Gold Equivalent Ounces from Silver   3,993   5,172   16,939   16,722
Total Precious Metal Gold Equivalent Ounces   10,404   11,637   35,803   35,630
  1. Based on actual days the mill operated during the period.
  2. Metal production represents metal contained in concentrates and doré produced at our Aguila processing facility, which is before payable metal deductions are levied by the buyers. Payable metals deductions are defined in our contracts with the buyers and represent estimates of metals contained in the concentrates and doré which the buyers deduct from payment. There are inherent limitations and differences in the sampling method and assaying of estimated metal contained in concentrates and doré that are shipped, and those contained metal estimates are derived from sampling methods and assaying throughout the production process. We monitor these differences to ensure that precious metal production quantities are materially correct.



The following Sales Statistics table summarizes certain information about our combined mining operations for the three and nine months ended September 30, 2018 and 2017:

             
  Three months ended
 September 30, 
 Nine months ended
 September 30, 
  2018 2017 2018 2017
             
Metal sold            
Gold (ozs.)   5,721   5,672   16,744   17,521
Silver (ozs.)   301,717   371,754   1,244,092   1,121,870
Copper (tonnes)   378   328   1,101   769
Lead (tonnes)   1,905   1,389   4,862   3,299
Zinc (tonnes)   3,942   4,326   11,527   9,452
Average metal prices realized (1)            
Gold ($ per oz.)   1,183   1,289   1,275   1,262
Silver ($ per oz.)   14.69   17.00   16.10   17.33
Copper ($ per tonne)   5,593   6,341   6,526   6,042
Lead ($ per tonne)   1,931   2,349   2,266   2,293
Zinc ($ per tonne)   1,825   2,936   2,899   2,790
Precious metal gold equivalent ounces sold            
Gold Ounces   5,721   5,672   16,744   17,521
Gold Equivalent Ounces from Silver   3,745   4,901   15,710   15,411
Total Precious Metal Gold Equivalent Ounces   9,466   10,573   32,454   32,932
Total cash cost before by-product credits per precious metal gold equivalent ounce sold (2) $ 1,954 $ 1,709 $ 1,687 $ 1,353
Total cash cost after by-product credits per precious metal gold equivalent ounce sold (2) (3) $ 582 $ 2 $ 97 $ 181
Total all-in sustaining cost per precious metal gold equivalent ounce sold (2) $ 1,338 $ 714 $ 724 $ 736
Total all-in cost per precious metal gold equivalent ounce sold (2) $ 1,406 $ 756 $ 774 $ 768
  1. Average metal prices realized vary from the market metal prices due to final 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.
  2. For a reconciliation of this non-GAAP measure to total mine cost of sales, which is the most comparable U.S. GAAP measure, please see Non-GAAP Measures in the Company’s most recently filed Form 10-Q.
  3. Total cash cost after by-product credits are significantly affected by base metals sales during the periods presented.

See Accompanying Tables

The following information summarizes the results of operations for Gold Resource Corporation for the three and nine months ended September 30, 2018 and 2017, its financial condition at September 30, 2018 and December 31, 2017 and its cash flows for the nine months ended September 30, 2018 and 2017. The summary data as of September 30, 2018 and for the three and nine months ended September 30, 2018 and 2017 is unaudited; the summary data as of December 31, 2017 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2017, 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 precious metal gold equivalent ounce, total all-in sustaining cost per precious metal gold equivalent ounce and total all-in cost per precious metal gold equivalent ounce contained in this press release are non-GAAP financial measures. Please see "Management's Discussion and Analysis and Results of Operations" 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 BALANCE SHEETS
(U.S. dollars in thousands, except share and per share amounts)
 
       
  September 30,  December 31, 
  2018  2017 
  (Unaudited)   
ASSETS      
Current assets:      
Cash and cash equivalents $ 16,601  $ 22,390 
Gold and silver rounds/bullion   3,405    3,812 
Accounts receivable   1,428    2,884 
Inventories, net   11,985    11,636 
Income tax receivable, net   1,276    - 
Prepaid expenses and other current assets   2,586    1,767 
Total current assets   37,281    42,489 
Property, plant and mine development, net   102,098    82,599 
Deferred tax assets, net   7,576    6,854 
Other non-current assets   835    981 
Total assets $147,790  $ 132,923 
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities:      
Accounts payable $ 13,908  $ 6,904 
Loans payable, current   743    568 
Capital leases, current   404    382 
Income taxes payable, net   -    1,944 
Mining royalty taxes payable, net   1,550    2,359 
Accrued expenses and other current liabilities   3,042    2,851 
Total current liabilities   19,647    15,008 
Reclamation and remediation liabilities   3,673    2,946 
Loans payable, long-term   1,572    1,645 
Capital leases, long-term   929    1,218 
Total liabilities   25,821    20,817 
Shareholders' equity:      
Common stock - $0.001 par value, 100,000,000 shares authorized:      
57,718,676 and 56,916,484 shares outstanding at September 30, 2018 and December 31, 2017, respectively   58    57 
Additional paid-in capital   116,877    114,584 
Retained earnings   12,089    4,520 
Treasury stock at cost, 336,398 shares   (5,884)   (5,884)
Accumulated other comprehensive loss   (1,171)   (1,171)
Total shareholders' equity   121,969    112,106 
Total liabilities and shareholders' equity $ 147,790  $ 132,923 


 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share amounts)
(Unaudited)
             
  Three months ended
 September 30, 
 Nine months ended
 September 30, 
  2018  2017 2018 2017
Sales, net $24,258  $ 31,122 $ 87,177 $ 76,849
Mine cost of sales:            
Production costs  17,363    16,122   50,477   39,634
Depreciation and amortization  3,515    3,762   10,587   10,271
Reclamation and remediation  87    37   379   101
Total mine cost of sales   20,965    19,921   61,443   50,006
Mine gross profit   3,293    11,201   25,734   26,843
Costs and expenses:            
General and administrative expenses  2,140    1,950   6,719   5,437
Exploration expenses  1,304    1,457   3,740   3,415
Other expense, net   568    110   1,356   1,183
Total costs and expenses   4,012    3,517   11,815   10,035
(Loss) income before income taxes   (719)   7,684   13,919   16,808
Provision for income taxes  62    3,103   5,489   6,987
Net (loss) income $ (781) $ 4,581 $ 8,430 $ 9,821
Net (loss) income per common share:            
Basic $ (0.01) $ 0.08 $ 0.15 $ 0.17
Diluted $ (0.01) $ 0.08 $ 0.14 $ 0.17
Weighted average shares outstanding:            
Basic   57,642,966    56,888,115   57,361,809   56,841,897
Diluted   57,642,966    57,455,805   58,252,652   57,617,030


 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (U.S. dollars in thousands)
(Unaudited)
       
  Nine months ended
 September 30, 
  2018  2017 
Cash flows from operating activities:      
Net income $ 8,430  $ 9,821 
Adjustments to reconcile net income to net cash from operating activities:      
Deferred income taxes   (467)   3,033 
Depreciation and amortization   11,096    10,602 
Stock-based compensation   1,090    877 
Other operating adjustments   706    392 
Changes in operating assets and liabilities:      
Accounts receivable   1,456    (3,034)
Inventories   (340)   (945)
Prepaid expenses and other current assets   (390)   958 
Other noncurrent assets   132    36 
Accounts payable and other accrued liabilities   3,536    3,319 
Mining royalty and income taxes payable, net   (4,428)   (1,556)
Net cash provided by operating activities   20,821    23,503 
       
Cash flows from investing activities:      
Capital expenditures   (26,085)   (20,382)
Other investing activities   5    (265)
Net cash used in investing activities   (26,080)   (20,647)
       
Cash flows from financing activities:      
Proceeds from the exercise of stock options   1,261    - 
Dividends paid   (860)   (852)
Repayment of loan payable   (424)   (46)
Repayment of capital leases   (285)   (21)
Net cash used in financing activities   (308)   (919)
       
Effect of exchange rate changes on cash and cash equivalents   (222)   (271)
Net (decrease) increase in cash and cash equivalents   (5,789)   1,666 
Cash and cash equivalents at beginning of period   22,390    14,166 
Cash and cash equivalents at end of period $ 16,601  $ 15,832 
       
Supplemental Cash Flow Information      
Interest expense paid $ 140  $ 24 
Income and mining taxes paid $ 6,822  $ 2,764 
Non-cash investing activities:      
Increase in accrued capital expenditures $ 3,935  $ 510 
Change in estimate for asset retirement cost $ 527  $ - 
Equipment purchased through loan payable $ 526  $ 2,397 
Equipment purchased under capital leases $ 17  $ 21 
Common stock issued for the acquisition of mineral rights $ -  $ 1,300 

About GRC:

Gold Resource Corporation is a gold and silver producer, developer and explorer with operations in Oaxaca, Mexico and Nevada, USA.  The Company targets low capital expenditure projects with potential for generating high returns on capital.  The Company has returned $111 million back to its shareholders since commercial production commenced July 1, 2010 and offers its 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

 


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