SOURCE: Gold Resource Corporation

Gold Resource Corporation

August 01, 2017 16:40 ET

Gold Resource Corporation Reports Second Quarter Net Income of $0.02 Per Share, Maintains 2017 Production Outlook

COLORADO SPRINGS, CO--(Marketwired - Aug 1, 2017) - Gold Resource Corporation (NYSE American: GORO) (NYSE MKT: GORO) (the "Company or GRC") reported production results for the second quarter ended June 30, 2017 of 5,696 ounces of gold and 397,670 ounces of silver, which along with base metal revenue generated $21.4 million in net revenue for the quarter and $0.9 million in net income 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 $110 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.

Q2 2017 HIGHLIGHTS

  • 5,696 gold ounces produced

  • 397,670 silver ounces produced

  • $21.4 million net sales

  • $0.9 million net income

  • $272 total cash cost per gold equivalent ounce sold (after by-product credits)

  • $770 total all-in sustaining cost per precious metal gold equivalent ounce sold

  • $11.1 million base metal by-product credits, or $1,207 per precious metal gold ounce sold

  • $0.3 million dividend distributions, or $0.005 per share for quarter

  • $16.4 million cash and cash equivalents

  • Expanded Switchback vein system mineralization to 625 meters, system remains open

  • Mirador mine development advanced to consistent ore feed by end of quarter

Overview of Q2 2017 Results

Gold Resource Corporation's Aguila Project sold 9,226 gold equivalent ounces at a total cash cost of $272 per ounce (after by-product credits), benefiting from strong base metals sales. Average realized metal prices during the quarter included $1,300 per ounce gold and $17.77 per ounce silver*. The Company recorded net income of $0.9 million, or $0.02 per share. The Company paid $0.3 million to shareholders in dividends, or $0.005 per share during the quarter. Cash and cash equivalents at quarter end totaled $16.4 million.

Production totals for the first six months of 2017 included 12,443 ounces of gold, 825,560 ounces of silver, 514 tonnes of copper, 2,134 tonnes of lead and 6,820 tonnes of zinc. The Company maintains its 2017 Annual Outlook, targeting a plus or minus 5 percent production of 27,500 gold ounces and 1,850,000 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 and Sales Statistics table summarizes certain information about our mining operations for the three and six months ended June 30, 2017 and 2016:

 
Production and Sales Statistics
    Three months ended
June 30,
  Six months ended
June 30,
    2017   2016   2017   2016
Milled                
  Tonnes Milled (1)     113,790     104,333     215,120     217,478
  Tonnes Milled per Day (2)     1,293     1,228     1,251     1,265
Grade                        
  Average Gold Grade (g/t)     1.82     3.27     2.10     2.68
  Average Silver Grade (g/t)     118     182     130     156
  Average Copper Grade (%)     0.33     0.40     0.31     0.30
  Average Lead Grade (%)     1.41     1.40     1.29     1.20
  Average Zinc Grade (%)     4.34     4.40     3.74     3.90
Recoveries                        
  Average Gold Recovery (%)     85     92     86     91
  Average Silver Recovery (%)     92     94     92     93
  Average Copper Recovery (%)     78     77     78     76
  Average Lead Recovery (%)     77     71     78     71
  Average Zinc Recovery (%)     85     84     85     84
Mill production (before payable metal deductions) (3)                        
  Gold (ozs.)     5,696     10,011     12,443     16,474
  Silver (ozs.)     397,670     572,499     825,560     1,006,640
  Copper (tonnes)     294     320     514     564
  Lead (tonnes)     1,207     1,009     2,134     1,847
  Zinc (tonnes)     4,176     3,813     6,820     7,074
Payable metal sold                        
  Gold (ozs.)     4,716     8,197     11,849     14,413
  Silver (ozs.)     329,881     548,537     750,116     927,331
  Copper (tonnes)     216     319     441     539
  Lead (tonnes)     1,071     974     1,910     1,737
  Zinc (tonnes)     2,977     3,424     5,126     7,074
Average metal prices realized (4)                        
  Gold ($ per oz.)     1,300     1,271     1,248     1,240
  Silver ($ per oz.)     17.77     17.08     17.50     15.97
  Copper ($ per tonne)     5,753     4,740     5,819     4,497
  Lead ($ per tonne)     2,173     1,717     2,251     1,757
  Zinc ($ per tonne)     2,543     1,940     2,667     1,844
Precious metal gold equivalent ounces produced (mill production) (3)                        
  Gold Ounces     5,696     10,011     12,443     16,474
  Gold Equivalent Ounces from Silver     5,437     7,695     11,571     12,971
  Total Precious Metal Gold Equivalent Ounces     11,133     17,706     24,014     29,445
Precious metal gold equivalent ounces sold                        
  Gold Ounces     4,716     8,197     11,849     14,413
  Gold Equivalent Ounces from Silver     4,510     7,373     10,513     11,949
  Total Precious Metal Gold Equivalent Ounces     9,226     15,570     22,362     26,362
  Total cash cost before by-product credits per precious metal gold equivalent ounce sold (5)   $ 1,479   $ 948   $ 1,185   $ 1,088
  Total cash cost after by-product credits per precious metal gold equivalent ounce sold (5)   $ 272   $ 317   $ 267   $ 459
  Total all-in sustaining cost per precious metal gold equivalent ounce sold (5)   $ 770   $ 547   $ 677   $ 773
  Total all-in cost per precious metal gold equivalent ounce sold (5)   $ 881   $ 625   $ 775   $ 871
(1) For the second quarter of 2017 and 2016 and first half of 2017 and 2016, this includes 11,250, 10,608, 39,971, and 27,305 tonnes, respectively of open pit ore.
(2) Based on actual days the mill operated during the period.
(3) 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 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 are derived from sampling methods and assaying throughout the mill production process. We monitor these differences to ensure that precious metal mill production quantities are materially correct.
(4) 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.
(5) 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 10-Q.
 
See Accompanying Tables

The following information summarizes the results of operations for Gold Resource Corporation for the three and six months ended June 30, 2017 and 2016, its financial condition at June 30, 2017 and December 31, 2016 and its cash flows for the six months ended June 30, 2017 and 2016. The summary data for the six months ended June 30, 2017 is unaudited; the summary data for the year ended December 31, 2016 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2016, 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)
   
    June 30,     December 31,  
    2017     2016  
    (Unaudited)        
ASSETS            
Current assets:            
  Cash and cash equivalents   $ 16,410     $ 14,166  
  Gold and silver rounds/bullion     3,644       3,307  
  Accounts receivable     1,276       630  
  Inventories, net     9,995       8,946  
  Income tax receivable     475       626  
  Prepaid expenses and other current assets     2,084       1,587  
    Total current assets     33,884       29,262  
Property, plant and mine development, net     79,498       70,059  
Deferred tax assets, net     16,407       17,580  
Other non-current assets     947       1,542  
    Total assets   $ 130,736     $ 118,443  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 11,796     $ 5,383  
  Mining royalty taxes payable     977       2,033  
  Accrued expenses and other current liabilities     2,243       1,526  
    Total current liabilities     15,016       8,942  
Reclamation and remediation liabilities     2,812       2,425  
Other non-current liabilities     10       -  
    Total liabilities     17,838       11,367  
Shareholders' equity:                
  Common stock - $0.001 par value, 100,000,000 shares authorized:                
    56,839,823 and 56,566,874 shares outstanding at June 30, 2017 and December 31, 2016, respectively     57       57  
  Additional paid-in capital     113,717       112,034  
  Retained earnings     6,179       2,040  
  Treasury stock at cost, 336,398 shares     (5,884 )     (5,884 )
  Accumulated other comprehensive loss     (1,171 )     (1,171 )
    Total shareholders' equity     112,898       107,076  
    Total liabilities and shareholders' equity   $ 130,736     $ 118,443  
 
 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(U.S. dollars in thousands, except share and per share amounts)
   
    Three months ended June 30,     Six months ended June 30,  
    2017   2016     2017   2016  
                     
Sales, net   $ 21,391   $ 26,198     $ 45,727   $ 43,601  
Mine cost of sales:                            
  Production costs     12,177     10,707       23,512     21,803  
  Depreciation and amortization     3,953     3,054       6,509     5,860  
  Reclamation and remediation     35     44       64     91  
    Total mine cost of sales     16,165     13,805       30,085     27,754  
Mine gross profit     5,226     12,393       15,642     15,847  
Costs and expenses:                            
  General and administrative expenses     1,675     1,670       3,487     3,848  
  Exploration expenses     1,136     642       1,958     1,146  
  Other expense (income), net     609     (538 )     1,073     (1,244 )
    Total costs and expenses     3,420     1,774       6,518     3,750  
Income before income taxes     1,806     10,619       9,124     12,097  
  Provision for income taxes     942     5,011       3,884     5,692  
Net income   $ 864   $ 5,608     $ 5,240   $ 6,405  
Net income per common share:                            
  Basic and Diluted   $ 0.02   $ 0.10     $ 0.09   $ 0.12  
Weighted average shares outstanding:                            
  Basic     56,839,823     54,266,706       56,818,406     54,266,706  
  Diluted     57,375,938     54,670,594       57,744,817     54,372,705  
 
 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
   
    Six months ended June 30,  
    2017     2016  
             
Cash flows from operating activities:            
  Net income   $ 5,240     $ 6,405  
  Adjustments to reconcile net income to net cash from operating activities:                
    Deferred income taxes     1,097       1,623  
    Depreciation and amortization     6,727       6,029  
    Stock-based compensation     383       486  
    Other operating adjustments     148       (713 )
  Changes in operating assets and liabilities:                
    Accounts receivable     (646 )     (1,724 )
    Inventories     (1,049 )     (1,404 )
    Prepaid expenses and other current assets     1,086       122  
    Accounts payable and other accrued liabilities     2,324       (1,571 )
    Mining royalty and income taxes payable/receivable     (1,316 )     2,256  
    Other noncurrent assets     25       41  
  Net cash provided by operating activities     14,019       11,550  
Cash flows from investing activities:                
    Capital expenditures     (10,818 )     (10,276 )
    Proceeds from the sale of equity investments     -       324  
    Other investing activities     (187 )     3  
  Net cash used in investing activities     (11,005 )     (9,949 )
Cash flows from financing activities:                
    Dividends paid     (568 )     (543 )
    Repayment of capital leases     (1 )     (606 )
  Net cash used in financing activities     (569 )     (1,149 )
Effect of exchange rate changes on cash and cash equivalents     (201 )     (10 )
Net increase in cash and cash equivalents     2,244       442  
Cash and cash equivalents at beginning of period     14,166       12,822  
Cash and cash equivalents at end of period   $ 16,410     $ 13,264  
Supplemental Cash Flow Information                
  Income and mining taxes paid   $ 2,369     $ 256  
Non-cash investing activities:                
    Increase (decrease) in accrued capital expenditures   $ 4,328     $ (2,769 )
    Equipment purchased under capital lease     21       300  
    Common stock issued for the acquisition of mineral rights   $ 1,300     $ -  
                     

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 56,839,823 shares outstanding, zero warrants and has returned over $110 million back to its shareholders since commercial production commenced July 1, 2010. Gold Resource Corporation 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 Form 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.

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