SOURCE: Gold Resource Corporation

Gold Resource Corporation

August 05, 2015 17:30 ET

Gold Resource Corporation Reports Second Quarter Results; Maintains Lower Range of 2015 Annual Outlook

COLORADO SPRINGS, CO--(Marketwired - Aug 5, 2015) - Gold Resource Corporation (NYSE MKT: GORO) (the "Company") reported production results for the second quarter ended June 30, 2015 of 6,788 ounces of gold, 580,326 ounces of silver ounces, or 14,858 precious metal gold equivalent (AuEq) ounces (calculated at actual sales price ratio of 72:1), which generated $23.3 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 over $105 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.

2015 Q2 HIGHLIGHTS

  • 14,858 ounces AuEq mill production
  • 14,589 ounces AuEq sold
  • $23.3 million sales, net
  • $1.6 million operating income
  • $533 total cash cost per ounce AuEq (after by-product credits)
  • $9.4 million Cash Flow from Mine Site Operations
  • $9.2 million by-product credits, or $629 per ounce AuEq sold
  • $1.6 million dividend distributions, or $0.03 per share for quarter

Overview of Q2 2015 Aguila Project Results

Gold Resource Corporation's Aguila Project produced 14,858 ounces AuEq at a total cash cost of $533 per ounce (after by-product credits). Realized average metal price sales during the quarter were $1,201 per ounce gold and $16.70 per ounce silver. The Company recorded net income of $0.8 million, or $0.01 per share. Cash Flow from Mine Site Operations totaled $9.4 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 $21.0 million. Realized gold and silver prices decreased 5.9% and 11.9%, respectively, compared to the second quarter of 2014.

"Second quarter 2015 production was weaker than expected due to challenges including water inflow management, slower than expected mine development and an illegal mine protest and work stoppage," stated Gold Resource Corporation's CEO and President, Mr. Jason Reid. "Halfway through the 2015 production year, the Company has produced 15,135 ounces of gold and 1,370,625 ounces of silver, delivering approximately 96% of expected gold production and 92% of expected silver production of the Company's lower range 2015 annual Outlook. Many of the challenges during the second quarter are behind us, such as the ancillary effects of the protest and work stoppage and third quarter mine improvements are underway, including implementing long-term solutions to help remediate the excess water issues. The Company believes the lower range of its 2015 annual production Outlook is within reach."

The following table summarizes certain information about our mining operations for the three and six months ended June 30, 2015 and 2014:

 
Production and Sales Statistics - Arista Underground Mine
                 
    Three months ended
June 30,
  Six months ended
June 30,
    2015   2014   2015   2014
Milled                
  Tonnes Milled     102,522     99,876   194,881     204,225
  Tonnes Milled per Day     1,127     1,098   1,077     1,128
Grade                      
  Average Gold Grade (g/t)     2.25     3.41   2.66     3.33
  Average Silver Grade (g/t)     189     315   235     300
  Average Copper Grade (%)     0.35     0.40   0.38     0.37
  Average Lead Grade (%)     1.24     1.34   1.35     1.28
  Average Zinc Grade (%)     3.59     3.18   3.65     3.31
Recoveries                      
  Average Gold Recovery (%)     92     93   91     92
  Average Silver Recovery (%)     93     93   93     92
  Average Copper Recovery (%)     82     79   79     79
  Average Lead Recovery (%)     74     75   75     73
  Average Zinc Recovery (%)     82     82   82     82
                       
Mill production (before payable metal deductions)(1)                      
  Gold (ozs.)     6,788     10,205   15,135     20,163
  Silver (ozs.)     580,326     940,268   1,370,625     1,819,226
  Copper (tonnes)     293     314   586     606
  Lead (tonnes)     943     994   1,956     1,923
  Zinc (tonnes)     3,038     2,603   5,800     5,526
Payable metal sold                      
  Gold (ozs.)     7,096     8,328   15,774     16,914
  Silver (ozs.)     538,848     829,351   1,266,164     1,595,886
  Copper (tonnes)     268     264   546     523
  Lead (tonnes)     907     922   1,827     1,734
  Zinc (tonnes)     2,559     2,249   4,763     4,407
Average metal prices realized (2)                      
  Gold ($ per oz.)     1,201     1,276   1,202     1,286
  Silver ($ per oz.)     16.70     18.96   16.72     19.60
  Copper ($ per tonne)     6,022     6,742   5,773     6,840
  Lead ($ per tonne)     1,908     2,109   1,819     2,101
  Zinc ($ per tonne)     2,275     2,116   2,152     2,083
Precious metal gold equivalent ounces produced (mill production) (1)(3)(4)                      
  Gold Ounces     6,788     10,205   15,135     20,163
  Gold Equivalent Ounces from Silver     8,070     13,967   19,069     27,733
  Total Precious Metal Gold Equivalent Ounces     14,858     24,172   34,204     47,896
Precious metal gold equivalent ounces sold (3)(4)                      
  Gold Ounces     7,096     8,328   15,774     16,914
  Gold Equivalent Ounces from Silver     7,493     12,319   17,616     24,327
  Total Precious Metal Gold Equivalent Ounces     14,589     20,647   33,390     41,241
  Total cash cost (before by-product credits) per precious metal gold equivalent ounce sold (including royalties) (5)   $ 1,162   $ 849   969   $ 828
  Total cash costs, after by-product credits, per precious metal gold equivalent ounce sold (including royalties) (5)   $ 533   $ 438   469   $ 430
                         
(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 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.
   
(2) 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.
   
(3) Precious metal gold equivalent mill production for the three months ended June 30, 2015 differs from gold equivalent ounces sold for the same period in 2015 due principally to buyer (smelter) concentrate processing and other deductions of approximately 1,116 gold equivalent ounces and a decrease in gold equivalent ounces contained in ending inventory of approximately 268 ounces.
   
(4) Precious metal gold equivalent mill production for the six months ended June 30, 2015 differs from gold equivalent ounces sold for the same period in 2015 due principally to buyer (smelter) concentrate processing and other deductions of approximately 2,438 gold equivalent ounces and a decrease in gold equivalent ounces contained in ending inventory of approximately 814 ounces.
   
(5) For a reconciliation of this non-GAAP measure to total mine cost of sales reconciliation, 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 54,179,369 shares outstanding, no warrants, no long term debt and has returned over $105 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, 2015 and 2014, its financial condition at June 30, 2015 and December 31, 2014 and its cash flows for the six months ended June 30, 2015 and 2014. The summary data for the three and six months ended June 30, 2015 is unaudited; the summary data for the year ended December 31, 2014 is derived from our audited financial statements contained in our annual report on Form 10-K for the year ended December 31, 2014, 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 BALANCE SHEETS
(U.S. dollars in thousands, except share and per share amounts)
         
    June 30,   December 31,
    2015   2014
    (Unaudited)    
ASSETS        
Current assets:        
  Cash and cash equivalents   $ 21,023   $ 27,541
  Gold and silver bullion     3,358     3,447
  Accounts receivable     688     1,416
  Inventories     8,489     7,295
  IVA taxes receivable     1,255     575
  Deferred tax assets     3,891     3,891
  Prepaid expenses and other current assets     1,804     2,935
    Total current assets     40,508     47,100
Property, plant and mine development, net     42,742     32,348
Deferred tax assets     23,917     25,519
Investments in equity securities     1,121     2,620
Other non-current assets     4,457     4,078
    Total assets   $ 112,745   $ 111,665
LIABILITIES AND SHAREHOLDERS' EQUITY            
Current liabilities:            
  Accounts payable   $ 5,718   $ 3,892
  Accrued expenses and other current liabilities     5,176     3,923
  Capital lease obligations, current portion     1,487     1,498
  Income taxes payable     2,345     7,907
  Dividends payable     542     542
    Total current liabilities     15,268     17,762
  Capital lease obligations     108     834
  Reclamation and remediation liabilities     2,765     2,993
    Total liabilities     18,141     21,589
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 54,515,767 shares issued and outstanding, respectively     55     55
  Additional paid-in capital     95,007     93,094
  Retained earnings     6,597     3,982
  Treasury stock at cost, 336,398 shares     (5,884)     (5,884)
  Accumulated other comprehensive loss     (1,171)     (1,171)
    Total shareholders' equity     94,604     90,076
    Total liabilities and shareholders' equity   $ 112,745   $ 111,665
                 
                 
                 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
for the three and six months ended June 30, 2015 and 2014
(U.S. dollars in thousands, except share and per share amounts)
(Unaudited)
 
                 
    Three months ended June 30,   Six months ended June 30,
    2015   2014   2015   2014
                 
Sales, net   $ 23,273   $ 33,669   $ 51,645   $ 64,821
Mine cost of sales:                        
  Production costs     14,117     14,801     27,051     29,021
  Depreciation and amortization     2,224     1,044     3,616     1,789
  Reclamation and remediation     7     -     30     -
    Total mine cost of sales     16,348     15,845     30,697     30,810
Mine gross profit     6,925     17,824     20,948     34,011
Costs and expenses:                        
  General and administrative expenses     2,388     2,249     5,119     5,262
  Exploration expenses     2,894     1,597     4,606     2,885
    Total costs and expenses     5,282     3,846     9,725     8,147
Operating income     1,643     13,978     11,223     25,864
Other (expense) income, net     (543)     214     (1,047)     683
Income before income taxes     1,100     14,192     10,176     26,547
  Provision for income taxes     288     6,384     4,311     11,613
Net income   $ 812   $ 7,808   $ 5,865   $ 14,934
Net income per common share:                        
  Basic   $ 0.01   $ 0.14   $ 0.11   $ 0.28
  Diluted   $ 0.01   $ 0.14   $ 0.11   $ 0.27
Weighted average shares outstanding:                        
  Basic     54,179,369     54,179,369     54,179,369     54,057,822
  Diluted     54,179,369     54,556,217     54,179,369     54,629,512
                           
                           
                           
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended June 30, 2015 and 2014
(U.S. dollars in thousands)
(Unaudited)
         
    2015   2014
         
Cash flows from operating activities:        
  Net income   $ 5,865   $ 14,934
  Adjustments to reconcile net income to net cash from operating activities:            
    Depreciation, depletion and amortization     3,748     1,895
    Stock-based compensation     1,913     1,956
    Deferred income taxes     1,602     -
    Currency exchange (gain) loss     (823)     10
    Unrealized loss (gain) on investments     1,499     (802)
    Other operating adjustments     301     -
  Changes in operating assets and liabilities:            
    Accounts receivable     728     (3,796)
    Inventories     (1,195)     1,104
    Prepaid expenses and other current assets     424     433
    Accounts payable and other accrued liabilities     703     433
    Income taxes payable/receivable     (5,263)     11,588
    Other noncurrent assets     (37)     -
  Net cash provided by operating activities     9,465     27,755
Cash flows from investing activities:            
    Capital expenditures     (11,943)     (7,438)
    Investments     -     (1,805)
    Other investing activities     28     16
  Net cash used in investing activities     (11,915)     (9,227)
Cash flows from financing activities:            
    Proceeds from exercise of stock options     -     100
    Dividends paid     (3,251)     (3,243)
    Repayment of capital leases     (745)     (731)
  Net cash used in financing activities     (3,996)     (3,874)
Effect of exchange rate changes on cash and cash equivalents     (72)     -
Net (decrease) increase in cash and cash equivalents     (6,518)     14,654
Cash and equivalents at beginning of period     27,541     14,973
Cash and equivalents at end of period   $ 21,023   $ 29,627
Supplemental Cash Flow Information            
  Interest expense paid   $ 48   $ 96
  Income and mining taxes paid   $ 7,321   $ -
               

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