SOURCE: Gold Resource Corporation

Gold Resource Corporation

May 12, 2014 21:10 ET

Gold Resource Corporation Reports First Quarter Results With Net Income of $0.13 per Share; Maintains 2014 Production Outlook

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     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  
                 
                 

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