SOURCE: Gold Resource Corporation

Gold Resource Corporation

August 07, 2014 17:05 ET

Gold Resource Corporation Reports Second Quarter Net Income of $7.8 Million, or $0.14 per Share; Maintains 2014 Production Outlook

COLORADO SPRINGS, CO--(Marketwired - Aug 7, 2014) - Gold Resource Corporation (NYSE MKT: GORO) (the "Company") reported production results for the second quarter ended June 30, 2014 of 24,172 ounces precious metal gold equivalent (AuEq) (calculated at actual sales price ratio of 67:1), which generated $33.7 million in revenues and net income of $7.8 million for the quarter, while decreasing its total cash cost per ounce AuEq by 32% over the second 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 $98 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.

2014 Q2 HIGHLIGHTS

  • 24,172 ounces AuEq mill production
  • 20,647 ounces AuEq sold
  • $438 total cash cost per ounce AuEq (after by-product credits and including 5% royalty)
  • 32% decrease in total cash cost per ounce AuEq from Q2 2013
  • $19.4 million Cash Flow from Mine Site Operations
  • $7.8 million net income, or $0.14 per share
  • $1.6 million dividend distributions, or $0.03 per share for quarter
  • $10.2 million Cash and Cash Equivalents increase from prior quarter to $29.6 million
  • 1,098 tonnes milled per day, a 27% increase over 2013 annual average
  • $8.5 million by-product credits, or $411 per ounce AuEq sold

Overview of Q2 2014 El Aguila Project Results

Gold Resource Corporation's El Aguila Project produced 24,172 ounces AuEq at a total cash cost of $438 per ounce. Realized average metal price sales during the quarter were $1,276 per ounce gold and $19 per ounce silver. Net income totaled $7.8 million, or $0.14 per share. Cash Flow from Mine Site Operations totaled $19.4 million. The Company paid $1.6 million to shareholders in dividends or $0.03 per share during the quarter. Cash and cash equivalents at quarter end totaled $29.6 million, increasing 98% during the first six months of 2014. Gold and silver prices decreased 7.9% and 17.4%, respectively, from the second quarter of 2013.

"The Company delivered strong second quarter operating results with production increasing 2% compared to first quarter, and increasing 17% over second quarter of 2013," stated Gold Resource Corporation's CEO and President, Mr. Jason Reid. "Total cash costs of $438 per precious metal gold equivalent ounce sold, calculated after by-product credits and including royalties, was 32% lower than second quarter of 2013. The Aguila Project continues to generate profits even in today's lower precious metal price environment, allowing the Company to invest in its Oaxaca Mining Unit, build its treasury, and distribute monthly dividends to our shareholders. The Company remains on track to meet its annual production outlook of 85,000 to 100,000 ounces of precious metal gold equivalent."

Below is a table of the key production statistics for our El Aguila Project during the three and six months ended June 30, 2014 and 2013:

                 
                 
Production and Sales Statistics - La Arista Underground Mine
 
    Three months ended
June 30,
  Six months ended
June 30,
    2014   2013   2014   2013
Production Summary                        
Milled:                        
  Tonnes Milled     99,876     72,740     204,225     148,924
  Tonnes Milled per Day     1,098     808     1,128     823
Grade:                        
  Average Gold Grade (g/t)     3.41     3.83     3.33     3.75
  Average Silver Grade (g/t)     315     349     300     347
  Average Copper Grade (%)     0.40     0.38     0.37     0.39
  Average Lead Grade (%)     1.34     1.12     1.28     1.11
  Average Zinc Grade (%)     3.18     2.61     3.31     2.70
Recoveries:                        
  Average Gold Recovery (%)     93     90     92     89
  Average Silver Recovery (%)     93     92     92     92
  Average Copper Recovery (%)     79     72     79     78
  Average Lead Recovery (%)     75     70     73     70
  Average Zinc Recovery (%)     82     74     82     77
Mill production (before payable metal deductions)(1)                        
  Gold (ozs.)     10,205     8,015     20,163     15,913
  Silver (ozs.)     940,268     747,646     1,819,226     1,525,317
  Copper (tonnes)     314     202     606     450
  Lead (tonnes)     994     573     1,923     1,159
  Zinc (tonnes)     2,603     1,405     5,523     3,081
Payable metal sold                        
  Gold (ozs.)     8,328     7,297     16,914     16,250
  Silver (ozs.)     829,351     755,746     1,595,886     1,618,898
  Copper (tonnes)     264     194     523     499
  Lead (tonnes)     922     496     1,734     1,139
  Zinc (tonnes)     2,249     1,180     4,407     2,915
Average metal prices realized (2)                        
  Gold (oz.)   $ 1,276   $ 1,386   $ 1,286   $ 1,530
  Silver (oz.)   $ 19   $ 23   $ 20   $ 27
  Copper (tonne)   $ 6,742   $ 7,114   $ 6,840   $ 7,652
  Lead (tonne)   $ 2,109   $ 2,127   $ 2,101   $ 2,308
  Zinc (tonne)   $ 2,116   $ 1,848   $ 2,083   $ 2,030
Precious metal gold equivalent ounces produced (mill production)(1)(4)(5)                        
  Gold Ounces     10,205     8,015     20,163     15,913
  Gold Equivalent Ounces from Silver     13,967     12,559     27,733     27,086
  Total Precious Metal Gold Equivalent Ounces     24,172     20,574     47,896     42,999
Precious metal gold equivalent ounces sold(3)(4)(5)                        
  Gold Ounces     8,328     7,297     16,914     16,250
  Gold Equivalent Ounces from Silver     12,319     12,695     24,327     28,748
  Total Precious Metal Gold Equivalent Ounces     20,647     19,992     41,241     44,998
  Total cash cost (before by-product credits) per precious metal gold equivalent ounce sold (including royalties) (3)   $ 849   $ 876   $ 828   $ 822
  Total cash costs, after by-product credits, per precious metal gold equivalent ounce sold (including royalties) (3)   $ 438   $ 645   $ 430   $ 547
   
(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 in Management's Discussion and Analysis contained in the report on Form 10-Q for the period ended June 30, 2014 filed with the Securities and Exchange Commission.
(4) Precious metal gold equivalent mill production for the three months ended June 30, 2014 of 24,172 ounces differs from gold equivalent ounces sold for the same period of 20,647 due principally to buyer (smelter) concentrate processing deductions of approximately 3,341 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 184 ounces.
(5) Precious metal gold equivalent mill production for the six months ended June 30, 2014 of 47,896 ounces differs from gold equivalent ounces sold for the same period of 41,241 principally due to buyer (smelter) concentrate processing deductions of approximately 5,459 gold equivalent ounces and an increase in gold equivalent ounces contained in ending inventory of approximately 1,196 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 and six months ended June 30, 2014 and 2013, its financial condition at June 30, 2014 and December 31, 2013 and its cash flows for the six months ended June 30, 2014 and 2013. The summary data for the three and six months ended June 30, 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 10-Q and Form 10-K for a complete discussion and reconciliation of the non-GAAP measures. 

                     
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME  
for the three and six months ended June 30, 2014 and 2013  
(U.S. dollars in thousands, except shares and per share amounts)  
(Unaudited)  
                     
                     
    Three months ended
June 30,
    Six months ended
June 30,
 
    2014   2013     2014   2013  
                             
Sales of metals concentrate, net   $ 33,669   $ 26,660     $ 64,821   $ 68,971  
Mine cost of sales:                            
  Production costs     14,801     14,931       29,021     30,642  
  Depreciation and amortization     1,044     557       1,789     1,093  
  Reclamation and remediation     -     28       -     57  
    Total mine cost of sales     15,845     15,516       30,810     31,792  
Mine gross profit     17,824     11,144       34,011     37,179  
Costs and expenses:                            
  General and administrative expenses     2,249     3,457       5,262     7,842  
  Exploration expenses     1,597     2,806       2,885     6,105  
  Facilities and mine construction     -     5,649       -     11,654  
    Total costs and expenses     3,846     11,912       8,147     25,601  
Operating income (loss)     13,978     (768 )     25,864     11,578  
Other income (expense)     214     (1,862 )     683     (1,898 )
Income (loss) before income taxes     14,192     (2,630 )     26,547     9,680  
  Provision (benefit) for income taxes     6,384     (1,257 )     11,613     3,667  
Net income (loss)   $ 7,808   $ (1,373 )   $ 14,934   $ 6,013  
Other comprehensive income (loss):                            
  Currency translation gain     -     (45 )     -     (11 )
Comprehensive income (loss)   $ 7,808   $ (1,418 )   $ 14,934   $ 6,002  
Net income (loss) per common share:                            
  Basic:   $ 0.14   $ (0.03 )   $ 0.28   $ 0.11  
  Diluted:   $ 0.14   $ (0.03 )   $ 0.27   $ 0.11  
                             
Weighted average shares outstanding:                            
  Basic     54,179,369     53,272,776       54,057,822     52,977,712  
  Diluted     54,556,217     53,272,776       54,629,512     55,434,474  
                               
                               
           
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(U.S. dollars in thousands, except shares)  
           
  June 30,     December 31,  
  2014     2013  
ASSETS (Unaudited)        
Current assets:              
  Cash and cash equivalents $ 29,627     $ 14,973  
  Gold and silver bullion   3,785       3,801  
  Accounts receivable   6,083       2,307  
  Inventories   6,358       7,468  
  Income taxes receivable   -       6,488  
  Deferred tax assets   3,973       3,973  
  Prepaid expenses and other assets   5,374       5,808  
    Total current assets   55,200       44,818  
Land and mineral rights   227       227  
Property, equipment and mine development - net   24,508       18,127  
Inventories   903       903  
Deferred tax assets   27,663       27,663  
Investments (including $2,710 and nil, respectively, measured at fair value)   2,941       231  
    Total assets $ 111,442     $ 91,969  
LIABILITIES AND SHAREHOLDERS' EQUITY              
Current liabilities:              
  Accounts payable $ 4,773     $ 2,873  
  Accrued expenses   4,796       5,613  
  Capital lease obligations   1,484       1,469  
  IVA taxes payable   1,131       925  
  Income taxes payable   5,161       -  
  Dividends payable   542       538  
    Total current liabilities   17,887       11,418  
Capital lease obligations   1,641       2,387  
Reclamation and remediation liabilities   2,894       2,887  
    Total liabilities   22,422       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   90,095       88,044  
Retained earnings/Accumulated (deficit)   5,925       (5,766 )
Treasury stock at cost, 336,398 shares   (5,884 )     (5,884 )
Accumulated other comprehensive (loss)   (1,171 )     (1,171 )
    Total shareholders' equity   89,020       75,277  
    Total liabilities and shareholders' equity $ 111,442     $ 91,969  
               
           
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
for the six months ended June 30, 2014 and 2013  
(U.S. dollars in thousands)  
(Unaudited)  
           
     
     
  2014     2013  
               
Cash flows from operating activities:              
  Net income $ 14,934     $ 6,013  
  Adjustments to reconcile net income to net cash from operating activities:              
    Depreciation and amortization   1,895       1,188  
    Reclamation and remediation   -       57  
    Stock-based compensation   1,956       3,690  
    Unrealized foreign currency exchange loss (gain)   10       217  
    Impairment loss on gold and silver bullion   -       1,743  
    Unrealized gain due to changes in fair value of investments   (802 )     -  
  Changes in operating assets and liabilities:              
    Accounts receivable   (3,796 )     3,086  
    Inventories   1,104       363  
    Prepaid expenses and other assets   433       (2,250 )
    Accounts payable   1,588       1,642  
    Accrued expenses   (1,359 )     1,682  
    IVA taxes payable/receivable   204       (370 )
    Income taxes payable/receivable   11,588       (6,081 )
  Net cash provided by operating activities   27,755       10,980  
Cash flows from investing activities:              
  Capital expenditures   (7,438 )     (5,113 )
  Purchases of gold and silver bullion   -       (806 )
  Proceeds from conversion of gold and silver bullion   16       1,048  
  Investments   (1,805 )     (231 )
  Net cash used in investing activities   (9,227 )     (5,102 )
Cash flows from financing activities:              
  Proceeds from exercise of stock options   100       150  
  Dividends paid   (3,243 )     (15,876 )
  Proceeds from capital leases   -       4,501  
  Repayment of capital leases   (731 )     -  
  Net cash used in financing activities   (3,874 )     (11,225 )
Effect of exchange rates on cash and equivalents   -       (19 )
Net increase (decrease) in cash and cash equivalents   14,654       (5,366 )
Cash and equivalents at beginning of period   14,973       35,780  
Cash and equivalents at end of period $ 29,627     $ 30,414  
               
Supplemental Cash Flow Information              
Interest paid $ 96     $ -  
Income taxes paid $ -     $ 9,823  

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