SOURCE: Gold Resource Corporation

Gold Resource Corporation

August 09, 2012 18:00 ET

Gold Resource Corporation Reports Second Quarter 2012 Results; Increases Production by 8% Over Prior Year Quarter

COLORADO SPRINGS, CO--(Marketwire - Aug 9, 2012) - Gold Resource Corporation (NYSE MKT: GORO) today announced results for its second quarter ending June 30, 2012. Gold Resource Corporation is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico. 

2012 Q2 HIGHLIGHTS

  • 17,211 ounces precious metal gold equivalent (AuEq) sold
  • 14,488 ounces AuEq produced
  • 8% AuEq production increase over prior year quarter
  • $17.2 million mine gross profit generated
  • $3.6 million net income, or $0.07 per share
  • $8.2 million pretax income, or $0.15 per share
  • $9.5 million dividend distribution, or $0.18 per share
  • $5.5 million physical gold and silver treasury
  • Successfully implemented physical gold and silver dividend program
  • $0.8 million increase in cash and cash equivalents from first quarter

Overview of Second Quarter 2012 Results from El Aguila Project

Gold Resource Corporation's El Aguila Project sold 17,211 ounces precious metal gold equivalent (AuEq) at a total cash cost of $509 per ounce AuEq in the second quarter. Average prices realized on sales during second quarter were $1,631 per ounce gold and $27 per ounce silver. The Company produced 14,488 ounces (AuEq) before payable metal deductions. Mine gross profit generated was $17.2 million. The Company paid $9.5 million to shareholders in dividends and converted $1.3 million of its treasury into physical gold and silver. In addition, the Company successfully implemented its physical dividend program where shareholders have the option to convert their cash dividends to physical gold and/or silver. 

"The second quarter was a challenge as infrastructure requirements slowed the development and stoping of high-grade ore zones at La Arista," stated Gold Resource Corporation's President, Mr. Jason Reid. "This resulted in processing diluted development ore and stoping from available lower grade ore zones. Even with mill production for the quarter below our target, it is still impressive that we were profitable, we paid $9.5 million in dividends to the owners of the Company, and we were still able to put approximately $800,000 in the bank."

Mr. Reid continued, "Our total cash cost per ounce of gold equivalent sold this quarter was high as a direct result of the lower production. Had we achieved our targeted production of 30,000 gold equivalent ounces, we believe total cash costs would have been equal to about half of the $509 per gold equivalent ounce we reported. We believe this higher total cash cost number to be temporary and will decrease with anticipated higher production in the current and future quarters." 

"We expect increased production from high-grade ore zone blocks between levels 7 through 10 prepared in the second quarter, which we are now actively stoping," stated Mr. Reid.

The Company will host a conference call at 11:00 a.m. EDT on Friday, August 10th. Conference call details can be found on the Company website at www.goldresourcecorp.com.

Below is a table of the key production statistics for our El Aguila Project during the three and six months ended June 30, 2012:

 
Production and Sales Statistics
    La Arista Underground Mine   La Arista Underground Mine
    Three months ended June 30,   Three months ended June 30,   Six months ended June 30,   Six months ended June 30,
    2012   2011   2012   2011
Production Summary                        
                         
  Milled:                        
    Tonnes Milled     59,928     40,194     135,006     55,217
    Tonnes Milled per Day     659     442     742     453
                           
  Grade:                        
    Average Gold Grade (g/t)     3.73     2.36     4.03     2.18
    Average Silver Grade (g/t)     274     386     390     388
    Average Copper Grade (%)     0.38     0.42     0.44     0.30
    Average Lead Grade (%)     1.75     1.10     1.74     1.06
    Average Zinc Grade (%)     4.01     2.39     3.78     2.26
                           
  Recoveries:                        
    Average Gold Recovery (%)     88     89     89     90
    Average Silver Recovery (%)     92     93     93     92
    Average Copper Recovery (%)     70     63     74     63
    Average Lead Recovery (%)     69     75     72     78
    Average Zinc Recovery (%)     78     72     76     67
                           
  Mill production (before payable metal deductions)                        
    Gold (ozs.)     6,342     2,720     15,564     3,484
    Silver (ozs.)     487,053     461,546     1,577,534     630,666
    Copper (tonnes)     161     104     442     104
    Lead (tonnes)     720     332     1,683     458
    Zinc (tonnes)     1,876     688     3,862     836
                           
  Payable metal sold                        
    Gold (ozs.)     7,119     2,384     13,613     7,614
    Silver (ozs.)     603,426     460,479     1,428,799     576,489
    Copper (tonnes)     186     81     393     81
    Lead (tonnes)     651     340     1,365     391
    Zinc (tonnes)     1,934     458     3,011     484
                           
  Average metal prices realized                        
    Gold (oz.)   $ 1,631   $ 1,576   $ 1,708   $ 1,444
    Silver (oz.)   $ 27   $ 37   $ 31   $ 36
    Copper ( tonne)   $ 7,850   $ 8,947   $ 8,319   $ 8,947
    Lead (tonne)   $ 2,018   $ 2,440   $ 2,074   $ 2,474
    Zinc ( tonne)   $ 1,958   $ 2,183   $ 2,027   $ 2,191
                           
  Gold equivalent ounces produced (mill production)                        
    Gold Ounces     6,342     2,720     15,564     3,484
    Gold Equivalent Ounces from Silver     8,146     10,737     28,890     15,812
    Total Gold Equivalent Ounces     14,488     13,457     44,454     19,296
                           
  Gold equivalent ounces sold                        
    Gold Ounces     7,119     2,384     13,614     3,697
    Gold Equivalent Ounces from Silver     10,092     10,713     26,166     14,454
    Total Gold Equivalent Ounces     17,211     13,097     39,780     18,151
                           
    Total Cash Cost per Gold Equivalent Ounce(1)   $ 509   $ 303   $ 347     - -
                         

(1) A reconciliation of this non-GAAP measure to mine cost of sales, the most comparable GAAP measure, can be found in the Non-GAAP Measures of the Company's quarterly report on Form 10-Q for the period ended June 30, 2012 filed with the SEC and available at www.sec.gov.

 
Production and Sales Statistics
    El Aguila Open Pit Mine
    Six months ended June 30,
    2011 (1)
Production Summary      
       
  Milled:      
    Tonnes Milled     46,409
    Tonnes Milled per Day     829
         
  Grade:      
    Average Gold Grade (g/t)     3.35
    Average Silver Grade (g/t)     39
         
  Recoveries:      
    Average Gold Recovery (%)     81
    Average Silver Recovery (%)     75
         
  Mill production (before payable metal deductions)      
    Gold (ozs.)     5,559
    Silver (ozs.)     58,309
         
  Payable metal sold      
    Gold (ozs.)     3,917
    Silver (ozs.)     43,605
         
  Average metal prices realized      
    Gold (oz.)   $ 1,383
    Silver (oz.)   $ 34
         
  Gold equivalent ounces produced (mill production)      
    Gold Ounces     5,559
    Gold Equivalent Ounces from Silver (2)     -
    Total Gold Equivalent Ounces     5,559
         
  Gold equivalent ounces sold      
    Gold Ounces     3,917
    Gold Equivalent Ounces from Silver (2)     -
    Total Gold Equivalent Ounces     3,917
       

(1) No activity for the three months ended June 30, 2011.
(2) Silver ounces were considered a by-product in arriving at the total cash cost per ounce equivalent.

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 52,828,776 shares outstanding, no warrants and no debt. Gold Resource Corporation is the only Company to offer its shareholders a dividend option to obtain physical gold or silver in addition to cash. 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 and six months ended June 30, 2012 and 2011, its financial condition at June 30, 2012 and December 31, 2011 and its cash flows for the three months and six months ended June 30, 2012 and 2011. The summary data for the three and six months ended June 30, 2012 and 2011 is unaudited; the summary data for the year ended December 31, 2011 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2011, 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.

   
GOLD RESOURCE CORPORATION  
(An Exploration Stage Company)  
CONSOLIDATED STATEMENTS OF OPERATIONS  
for the three and six months ended June 30, 2012 and 2011  
(U.S. dollars in thousands, except shares and per share amounts)  
(Unaudited)  
                         
                         
    Three months ended
June 30,
    Six months ended
June 30,
 
    2012     2011     2012     2011  
                                 
Sales of metals concentrate, net   $ 30,010     $ 20,664     $ 70,631     $ 31,944  
                                 
Mine cost of sales:                                
  Production costs applicable to sales     12,603       5,200       19,697       9,277  
  Depreciation and amortization     152       79       384       143  
  Accretion     19       22       40       43  
    Total mine cost of sales     12,774       5,301       20,121       9,463  
Mine gross profit     17,236       15,363       50,510       22,481  
                                 
Costs and expenses:                                
  General and administrative expenses     3,400       1,591       5,989       2,978  
  Exploration expenses     2,231       1,023       3,584       1,535  
  Construction and development     4,117       6,025       8,098       9,091  
  Production start up expense, net     -       -       -       -  
  Management contract expense     -       -       -       -  
    Total costs and expenses     9,748       8,639       17,671       13,604  
                                 
Operating income (loss)     7,488       6,724       32,839       8,877  
                                 
Other income (expense)     692       (23 )     (1,297 )     (144 )
                                 
Income (loss) before income taxes     8,180       6,701       31,542       8,733  
                                 
  Provision for income taxes     4,576       1,806       11,818       1,806  
                                 
Net income (loss) before extraordinary item     3,604       4,895       19,724       6,927  
                                 
Extraordinary items:                                
  Flood loss, net of income tax benefit of $750     -       (1,756 )     -       (1,756 )
                                 
Net income (loss)   $ 3,604     $ 3,139     $ 19,724     $ 5,171  
                                 
Other comprehensive (loss) income:                                
  Currency translation gain (loss)     (1,689 )     (80 )     (225 )     384  
Net comprehensive income (loss)   $ 1,915     $ 3,059     $ 19,499     $ 5,555  
                                 
Net income per common share:                                
  Basic:                                
    Before extraordinary item   $ 0.07     $ 0.09     $ 0.37     $ 0.13  
    Extraordinary item     -     $ (0.03 )     -     $ (0.03 )
    Net income   $ 0.07     $ 0.06     $ 0.37     $ 0.10  
  Diluted:                                
    Before extraordinary item   $ 0.06     $ 0.09     $ 0.35     $ 0.12  
    Extraordinary item     -     $ (0.03 )     -     $ (0.03 )
    Net income   $ 0.06     $ 0.06     $ 0.35     $ 0.09  
Weighted average shares outstanding:                                
  Basic     52,909,756       52,998,303       52,904,370       52,998,303  
  Diluted     56,443,419       56,545,865       56,400,692       56,530,421  
                                 
   
GOLD RESOURCE CORPORATION  
(An Exploration Stage Company)  
CONSOLIDATED BALANCE SHEETS  
(U.S. dollars in thousands, except shares)  
(unaudited)  
             
    June 30,     December 31,  
    2012     2011  
             
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 44,778     $ 51,960  
  Gold and silver bullion     5,517       2,549  
  Accounts receivable     8,307       14,281  
  Inventories     5,287       4,243  
  Deferred tax assets     11,118       11,118  
  Prepaid expenses     869       957  
    Total current assets     75,876       85,108  
                 
Land and mineral rights     227       227  
Property and equipment - net     12,751       10,318  
Deferred tax assets     19,517       19,517  
    Total assets   $ 108,371     $ 115,170  
                 
                 
LIABILITIES AND SHAREHOLDERS' EQUITY                
                 
Current liabilities:                
  Accounts payable   $ 586     $ 1,691  
  Accrued expenses     4,212       4,879  
  IVA taxes payable     3,676       559  
  Income taxes payable     490       15,987  
  Dividends payable     3,175       2,645  
    Total current liabilities     12,139       25,761  
                 
Asset retirement obligation     2,405       2,281  
    Total liabilities     14,544       28,042  
                 
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:                
    53,015,767 and 52,998,303 shares issued and outstanding, respectively     53       53  
  Additional paid-in capital     119,729       132,529  
  (Deficit) accumulated during the exploration stage     (19,798 )     (39,522 )
  Treasury stock at cost, 104,251 shares     (1,954 )     (1,954 )
  Other comprehensive income - currency translation adjustment     (4,203 )     (3,978 )
    Total shareholders' equity     93,827       87,128  
                   
    Total liabilities and shareholders' equity   $ 108,371     $ 115,170  
                 
   
GOLD RESOURCE CORPORATION  
(An Exploration Stage Company)  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
for the three and six months ended June 30, 2012 and 2011  
(U.S. dollars in thousands)  
(Unaudited)  
                         
                   
    Three months ended
June 30,
    Six months ended
June 30,
 
    2012     2011     2012     2011  
                                 
Cash flows from operating activities:                                
  Net income   $ 3,604     $ 3,139     $ 19,724     $ 5,171  
  Adjustments to reconcile net income to net cash provided by (used in) operating activities:                                
    Depreciation and amortization     221       186       518       330  
    Accretion     19       22       40       43  
    Stock-based compensation     2,603       1,521       4,659       2,898  
    Currency translation gain (loss)     (1,689 )     (80 )     (225 )     384  
    Unrealized loss from gold and silver bullion held     528       -       329       -  
    Realized loss from gold and silver bullion converted     90       -       90       -  
  Changes in operating assets and liabilities:                                
    Accounts receivable     9,594       1,798       5,974       (1,411 )
    Inventories     2,165       2,177       (1,044 )     (2,511 )
    Prepaid expenses     -       (376 )     88       (385 )
    Accounts payable     (574 )     752       (1,105 )     1,201  
    Accrued expenses     (310 )     (292 )     (667 )     (521 )
    IVA taxes payable     1,634       1,753       3,117       1,830  
    Income taxes payable     (6,830 )     1,056       (15,497 )     1,056  
    Dividends payable     530       530       530       530  
  Total adjustments     7,981       9,047       (3,193 )     3,444  
    Net cash provided by operating activities     11,585       12,186       16,531       8,615  
                                 
Cash flows from investing activities:                                
    Capital expenditures     (649 )     (1,664 )     (2,951 )     (3,089 )
    Purchases of gold and silver bullion     (1,304 )     -       (4,183 )     -  
    Conversion of gold and silver bullion     796       -       796       -  
    Net cash used in investing activities     (1,157 )     (1,664 )     (6,338 )     (3,089 )
                                 
Cash flows from financing activities:                                
    Dividends paid     (9,524 )     (6,360 )     (17,459 )     (11,130 )
    Net cash used in financing activities     (9,524 )     (6,360 )     (17,459 )     (11,130 )
                                 
Effect of exchange rates on cash and equivalents     (129 )     32       84       120  
                                 
Net increase (decrease) in cash and equivalents     775       4,194       (7,182 )     (5,484 )
                                 
Cash and equivalents at beginning of period     44,003       37,904       51,960       47,582  
                                 
Cash and equivalents at end of period   $ 44,778     $ 42,098     $ 44,778     $ 42,098  
                                 
Supplemental Cash Flow Information                                
  Income taxes paid   $ 11,087     $ -     $ 28,392     $ -  
                                 

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