SOURCE: Gold Resource Corporation

Gold Resource Corporation

August 02, 2016 16:32 ET

Gold Resource Corporation Reports Second Quarter Net Income of $5.6 Million, or $0.10 per Share; Maintains 2016 Production Outlook

COLORADO SPRINGS, CO--(Marketwired - Aug 2, 2016) -  Gold Resource Corporation (NYSE MKT: GORO) (the "Company") reported production results for the second quarter ended June 30, 2016 of 10,011 ounces of gold and 572,499 ounces of silver, which along with base metal revenue generated $26.2 million in net revenue for the quarter. Gold Resource Corporation is a gold and silver producer with operations in Oaxaca, Mexico and exploration in Nevada, USA. The Company has returned $108 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.

2016 Q2 HIGHLIGHTS

  • 10,011 gold ounces produced
  • 572,499 silver ounces produced
  • $26.2 million net sales
  • $317 total cash cost per gold equivalent ounce (after by-product credits)
  • $15.5 million adjusted cash flow from mine site operations
  • $9.8 million by-product credits, or $631 per ounce sold
  • $0.3 million dividend distributions, or $0.005 per share for quarter

Overview of Q2 2016 Results

Gold Resource Corporation's Aguila Project produced 17,706 gold equivalent ounces at a total cash cost of $317 per ounce (after by-product credits). Realized average metal price sales during the quarter were $1,271 per ounce gold and $17.08 per ounce silver. The Company recorded net income of $5.6 million, or $0.10 per share. Adjusted cash flow from mine site operations totaled $15.5 million. 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 $13.3 million. Realized gold and silver prices increased 6% and 2%, respectively, compared to the second quarter of 2015.

Production for the first half of 2016 included 16,474 ounces of gold and 1,006,640 ounces of silver. The Company maintains its 2016 Annual Outlook of 26,000 gold ounces, 1,900,000 silver ounces, 1,100 tonnes of copper, 3,200 tonnes of lead and 12,900 tonnes of zinc.

The following table summarizes certain information about our mining operations for the three and six months ended June 30, 2016 and 2015:

               
  Three months ended
June 30,
  Six months ended
June 30,
  2016   2015   2016   2015
Milled                      
  Tonnes Milled (1)   104,333     102,522     217,478     194,881
  Tonnes Milled per Day (2)   1,228     1,127     1,265     1,077
Grade                      
  Average Gold Grade (g/t)   3.27     2.25     2.68     2.66
  Average Silver Grade (g/t)   182     189     156     235
  Average Copper Grade (%)   0.40     0.35     0.30     0.38
  Average Lead Grade (%)   1.40     1.24     1.20     1.35
  Average Zinc Grade (%)   4.40     3.59     3.90     3.65
Recoveries                      
  Average Gold Recovery (%)   92     92     91     91
  Average Silver Recovery (%)   94     93     93     93
  Average Copper Recovery (%)   77     82     76     79
  Average Lead Recovery (%)   71     74     71     75
  Average Zinc Recovery (%)   84     82     84     82
Mill production (before payable metal deductions) (3)                      
  Gold (ozs.)   10,011     6,788     16,474     15,135
  Silver (ozs.)   572,499     580,326     1,006,640     1,370,625
  Copper (tonnes)   320     293     564     586
  Lead (tonnes)   1,009     943     1,847     1,956
  Zinc (tonnes)   3,813     3,038     7,074     5,800
Payable metal sold                      
  Gold (ozs.)   8,197     7,096     14,413     15,774
  Silver (ozs.)   548,537     538,848     927,331     1,266,164
  Copper (tonnes)   319     268     539     546
  Lead (tonnes)   974     907     1,737     1,827
  Zinc (tonnes)   3,424     2,559     6,023     4,763
Average metal prices realized (4)                      
  Gold ($ per oz.)   1,271     1,201     1,240     1,202
  Silver ($ per oz.)   17.08     16.70     15.97     16.72
  Copper ($ per tonne)   4,740     6,022     4,497     5,773
  Lead ($ per tonne)   1,717     1,908     1,757     1,819
  Zinc ($ per tonne)   1,940     2,275     1,844     2,152
Precious metal gold equivalent ounces produced (mill production) (3)                      
  Gold Ounces   10,011     6,788     16,474     15,135
  Gold Equivalent Ounces from Silver   7,695     8,070     12,971     19,069
  Total Precious Metal Gold Equivalent Ounces   17,706     14,858     29,445     34,204
Precious metal gold equivalent ounces sold                      
  Gold Ounces   8,197     7,096     14,413     15,774
  Gold Equivalent Ounces from Silver   7,373     7,493     11,949     17,616
  Total Precious Metal Gold Equivalent Ounces   15,570     14,589     26,362     33,390
  Total cash cost before by-product credits per precious metal gold equivalent ounce sold (5) $ 948   $ 1,162   $ 1,088   $ 969
  Total cash cost after by-product credits per precious metal gold equivalent ounce sold (5) $ 317   $ 533   $ 459   $ 469
  Total all-in sustaining cost per precious metal gold equivalent ounce sold (5) $ 649   $ 854   $ 916   $ 842
  Total all-in cost per precious metal gold equivalent ounce sold (5) $ 755   $ 1,368   $ 1,035   $ 1,112
                         
(1) For the second quarter and first half of 2016, this includes 10,608 and 27,305 tonnes, respectively of low-grade stockpile open pit ore.
(2) Based on actual days the mill operated during the year.
(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 produced at our mill 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. The Company monitors 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
   
   

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 at its producing Oaxaca, Mexico Mining Unit and exploration properties at its Nevada, USA, Mining Unit. The Company has 54,266,706 shares outstanding, no warrants, no long term debt and has returned $108 million back to shareholders since commercial production commenced July 1, 2010. 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, 2016 and 2015, its financial condition at June 30, 2016 and December 31, 2015 and its cash flows for the six months ended June 30, 2016 and 2015. The summary data for the six months ended June 30, 2016 is unaudited; the summary data for the year ended December 31, 2015 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2015, 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 per ounce, total all-in sustaining cost per precious metal gold equivalent per ounce and total all-in cost per precious metal gold equivalent per 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,  
    2016     2015  
    (Unaudited)        
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 13,264     $ 12,822  
  Gold and silver rounds/bullion     3,785       2,988  
  Accounts receivable     2,045       321  
  Inventories     10,055       8,753  
  IVA taxes receivable     780       1,332  
  Income tax receivable     2,074       3,794  
  Prepaid expenses and other current assets     2,334       2,608  
    Total current assets     34,337       32,618  
Property, plant and mine development, net     52,523       51,637  
Deferred tax assets     19,433       21,064  
Investments in equity securities     231       231  
Other non-current assets     902       985  
    Total assets   $ 107,426     $ 106,535  
LIABILITIES AND SHAREHOLDERS' EQUITY                
  Current liabilities:                
  Accounts payable   $ 6,730     $ 11,600  
  Accrued expenses and other current liabilities     2,086       2,140  
  Capital lease obligations     -       842  
  Mining royalty taxes payable     771       230  
  Dividends payable     90       90  
    Total current liabilities     9,677       14,902  
Reclamation and remediation liabilities     2,583       2,815  
    Total liabilities     12,260       17,717  
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: 54,603,104 and 54,266,706 shares issued and outstanding at June 30, 2016 and December 31, 2015     55       55  
  Additional paid-in capital     96,980       96,766  
  Accumulated retained earnings / (deficit)     5,186       (948 )
  Treasury stock at cost, 336,398 shares     (5,884 )     (5,884 )
  Accumulated other comprehensive loss     (1,171 )     (1,171 )
    Total shareholders' equity     95,166       88,818  
    Total liabilities and shareholders' equity   $ 107,426     $ 106,535  
                 
                 
                 
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
(U.S. dollars in thousands, except share and per share amounts)  
(Unaudited)  
   
  Three months ended
June 30,
    Six months ended
June 30,
 
  2016   2015     2016   2015  
                           
Sales, net $ 26,198   $ 23,273     $ 43,601   $ 51,645  
Mine cost of sales:                          
  Production costs   10,707     14,117       21,803     27,051  
  Depreciation and amortization   3,054     2,224       5,860     3,616  
  Reclamation and remediation   44     7       91     30  
    Total mine cost of sales   13,805     16,348       27,754     30,697  
Mine gross profit   12,393     6,925       15,847     20,948  
Costs and expenses:                          
  General and administrative expenses   1,670     2,388       3,848     5,119  
  Exploration expenses   642     2,894       1,146     4,606  
    Total costs and expenses   2,312     5,282       4,994     9,725  
Operating income   10,081     1,643       10,853     11,223  
Other income (expense), net   538     (543 )     1,244     (1,047 )
Income before income taxes   10,619     1,100       12,097     10,176  
  Provision for income taxes   5,011     288       5,692     4,311  
Net income $ 5,608   $ 812     $ 6,405   $ 5,865  
Net income per common share:                          
  Basic and diluted $ 0.10   $ 0.01     $ 0.12   $ 0.11  
Weighted average shares outstanding:                          
  Basic   54,266,706     54,179,369       54,266,706     54,179,369  
  Diluted   54,670,594     54,179,369       54,372,705     54,179,369  
                           
                           
                           
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(U.S. dollars in thousands)  
(Unaudited)  
   
    Six months ended June 30,  
    2016     2015  
                 
Cash flows from operating activities:                
  Net income   $ 6,405     $ 5,865  
  Adjustments to reconcile net income to net cash from operating activities:                
    Deferred income taxes     1,623       1,602  
    Depreciation, depletion and amortization     6,029       3,748  
    Stock-based compensation     486       1,913  
    Other operating adjustments     (815 )     977  
  Changes in operating assets and liabilities:                
    Accounts receivable     (1,724 )     728  
    Inventories     (1,302 )     (1,195 )
    Prepaid expenses and other current assets     122       424  
    Accounts payable and other accrued liabilities     (1,571 )     703  
    Mining and income taxes payable/receivable     2,256       (5,263 )
    Other noncurrent assets     41       (37 )
  Net cash provided by operating activities     11,550       9,465  
Cash flows from investing activities:                
    Capital expenditures     (10,276 )     (11,943 )
    Proceeds from the sale of equity investments     324       -  
    Other investing activities     3       28  
  Net cash used in investing activities     (9,949 )     (11,915 )
Cash flows from financing activities:                
    Dividends paid     (543 )     (3,251 )
    Repayment of capital leases     (606 )     (745 )
  Net cash used in financing activities     (1,149 )     (3,996 )
Effect of exchange rate changes on cash and cash equivalents     (10 )     (72 )
Net increase (decrease) in cash and cash equivalents     442       (6,518 )
Cash and cash equivalents at beginning of period     12,822       27,541  
Cash and cash equivalents at end of period   $ 13,264     $ 21,023  
Supplemental Cash Flow Information                
  Interest expense paid   $ 13     $ 48  
  Income and mining taxes paid   $ 256     $ 7,321  

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