SOURCE: Gold Resource Corporation

Gold Resource Corporation

November 15, 2012 06:33 ET

Gold Resource Corporation Reports Third Quarter 2012 Results; Increases Production by 54% Over Prior Quarter

COLORADO SPRINGS, CO--(Marketwire - Nov 15, 2012) - Gold Resource Corporation (NYSE MKT: GORO) (the Company) today announced results for its third quarter ending September 30, 2012. Gold Resource Corporation is a low-cost gold producer with operations in the southern state of Oaxaca, Mexico. 

2012 Q3 HIGHLIGHTS

  • 22,336 ounces precious metal gold equivalent (AuEq) produced
  • 18,059 ounces (AuEq) sold
  • 54% AuEq production increase over prior quarter
  • $23.8 million mine gross profit generated
  • $13.1 million pretax income, or $0.26 per share
  • $7.3 million net income, or $0.14 per share
  • $9.5 million dividend distribution, or $0.18 per share
  • $6.6 million physical gold and silver in treasury 
  • Continued physical gold and silver dividend program

Overview of Third Quarter 2012 Results from El Aguila Project

Gold Resource Corporation's El Aguila Project produced 22,336 ounces (AuEq) before payable metal deductions. The Company sold 18,059 ounces precious metal gold equivalent (AuEq) at a total cash cost of $459 per ounce AuEq in the third quarter. Average prices realized on sales during the quarter were $1,769 per ounce gold and $32 per ounce silver. Mine gross profit generated was $23.8 million. The Company paid $9.5 million to shareholders in dividends. The Company continued its physical dividend program where shareholders have the option to convert their cash dividends to physical gold and/or silver. 

"Our 54% increase in third quarter production was the result of overcoming many challenges including increasing water, increasing CO2 gas and mine development hurdles," stated Gold Resource Corporation's President, Mr. Jason Reid. "We continued to upgrade our management team which I believe was in large part the reason behind the increase in production. The positive takeaway from the quarter should include increased production, continued profitability, lowered total cash costs, and returning $9.5 million in dividends to the owners of the Company," stated Mr. Reid.

The Company will host a conference call at 11:00 a.m. EST on Thursday, November 15. 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 nine months ended September 30, 2012:

 
Production and Sales Statistics
    La Arista Underground Mine   La Arista Underground Mine
    Three Months Ended September 30,   Three Months Ended September 30,   Nine Months Ended September 30,   Nine Months Ended September 30,
    2012   2011   2012   2011
Production Summary                        
Milled:                        
  Tonnes Milled     76,786     57,156     211,792     112,372
  Tonnes Milled per Day     835     621     773     621
Grade:                        
  Average Gold Grade (g/t)     4.17     3.89     4.08     3.02
  Average Silver Grade (g/t)     320     491     365     438
  Average Copper Grade (%)     0.43     0.47     0.44     0.44
  Average Lead Grade (%)     2.14     1.30     1.88     1.18
  Average Zinc Grade (%)     4.43     2.91     4.01     2.58
Recoveries:                        
  Average Gold Recovery (%)     88     89     89     90
  Average Silver Recovery (%)     94     93     93     93
  Average Copper Recovery (%)     75     78     74     75
  Average Lead Recovery (%)     64     77     69     78
  Average Zinc Recovery (%)     80     77     77     73
Mill production (before payable metal deductions)(2)                  
  Gold (ozs.)     9,047     6,371     24,611     9,855
  Silver (ozs.)     739,576     841,820     2,317,110     1,472,486
  Copper (tonnes)     245     211     687     369
  Lead (tonnes)     1,051     569     2,734     1,027
  Zinc (tonnes)     2,705     1,281     6,567     2,117
Payable metal sold(2)                        
  Gold (ozs.)     7,287     5,605     20,317     13,219
  Silver (ozs.)     599,501     780,317     1,982,868     1,356,806
  Copper (tonnes)     214     189     596     270
  Lead (tonnes)     869     497     2,231     888
  Zinc (tonnes)     1,993     938     5,003     1,422
Average metal prices realized                        
  Gold (oz.)   $ 1,769   $ 1,702   $ 1,690   $ 1,553
  Silver (oz.)   $ 32   $ 38   $ 31   $ 37
  Copper ( tonne)   $ 8,161   $ 8,835   $ 8,162   $ 8,869
  Lead (tonne)   $ 2,107   $ 2,346   $ 2,080   $ 2,402
  Zinc ( tonne)   $ 1,999   $ 2,182   $ 1,997   $ 2,185
Gold equivalent ounces produced (mill production)(2)                  
  Gold Ounces     9,047     6,371     24,611     9,397
  Gold Equivalent Ounces from Silver     13,289     18,918     42,038     31,270
  Total Gold Equivalent Ounces     22,336     25,289     66,649     40,667
Gold equivalent ounces sold(2)                        
  Gold Ounces     7,287     5,605     20,317     13,219
  Gold Equivalent Ounces from Silver     10,772     17,535     35,974     32,651
  Total Gold Equivalent Ounces     18,059     23,140     56,291     45,870
  Total Cash Cost per Gold Equivalent Ounce(1)   $ 459   $ 260   $ 396   $ -

(1) A reconciliation of this non-GAAP measure to mine cost of sales, the most comparable GAAP measure, can be found below in Non-GAAP Measures. Total cash cost per gold equivalent ounce sold for the combined La Arista underground mine and the El Aguila open pit mine for the for the nine months ended September 30, 2011, can be found in the Non-GAAP Measures in the Form 10-Q for the period ended September 30, 2012.
(2) Mill production represents metal contained in concentrates produced at the mill, which is before payable metal deductions are levied by the buyer of the Company's concentrates. In addition, mill production quantities for the nine months ended September 30, 2012 do not reflect any deduction for 757 gold ounces and 43,435 silver ounces (approximately 1,800 gold equivalent ounces) resulting from the settlement agreement with the buyer of the Company's concentrates as discussed in Note 13 of the Consolidated Financial Statements in the Form 10-Q for the period ended September 30, 2012. Gold equivalent ounces sold for the nine months ended September 30, 2012 have been reduced by approximately 1,800 gold equivalent ounces as a result of the settlement.

Production and Sales Statistics
    El Aguila Open Pit Mine
    Nine Months Ended September 30,
    2011 (1)
Production Summary      
Milled:      
  Tonnes Milled     46,409
  Tonnes Milled per Day     829
Grade:      
  Average Gold Grade (g/t)     4.18
  Average Silver Grade (g/t)     53
Recoveries:      
  Average Gold Recovery (%)     89
  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 September 30, 2011.
(2) Silver ounces were considered a by-product in arriving at the total cash cost per ounce equivalent.
(3) Total cash cost per gold equivalent ounce sold for the combined La Arista underground mine and the El Aguila open pit mine for the for the nine months ended September 30, 2011 can be found in the Non-GAAP Measures in the Form 10-Q for the period ended September 30, 2012.

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 52,679,369 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 nine months ended September 30, 2012 and 2011, its financial condition at September 30, 2012 and December 31, 2011 and its cash flows for the three months and nine months ended September 30, 2012 and 2011. The summary data for the three and nine months ended September 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 nine months ended September 30, 2012 and 2011  
(U.S. dollars in thousands, except shares and per share amounts)  
(Unaudited)  
                         
                         
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
                         
Sales of metals concentrate, net   $ 36,490     $ 37,781     $ 103,399     $ 69,725  
Mine cost of sales:                                
  Production costs     12,141       7,690       31,838       16,967  
  Depreciation and amortization     556       184       940       327  
  Accretion     20       20       60       63  
    Total mine cost of sales     12,717       7,894       32,838       17,357  
Mine gross profit     23,773       29,887       70,561       52,368  
Costs and expenses:                                
  General and administrative expenses     2,933       1,812       8,922       4,790  
  Exploration expenses     1,882       1,735       5,466       3,271  
  Construction and development     5,394       4,467       13,492       13,557  
    Total costs and expenses     10,209       8,014       27,880       21,618  
Operating income     13,564       21,873       42,681       30,750  
Other income (expense)     (485 )     2,476       (1,782 )     2,333  
Income before income taxes     13,079       24,349       40,899       33,083  
  Provision for income taxes     5,782       9,131       16,398       10,937  
Net income before extraordinary item     7,297       15,218       24,501       22,146  
Extraordinary items:                                
  Flood loss, net of income tax benefit of $750     -       -       -       (1,756 )
Net income   $ 7,297     $ 15,218     $ 24,501     $ 20,390  
Other comprehensive (loss) income:                                
  Currency translation gain (loss)     2,168       (4,227 )     1,943       (3,844 )
Net comprehensive income   $ 9,465     $ 10,991     $ 26,444     $ 16,546  
Net income per common share:                                
  Basic:                                
    Before extraordinary item   $ 0.14     $ 0.29     $ 0.46     $ 0.41  
    Extraordinary item   $ -     $ -     $ -     $ (0.03 )
    Net income   $ 0.14     $ 0.29     $ 0.46     $ 0.38  
  Diluted:                                
    Before extraordinary item   $ 0.13     $ 0.27     $ 0.43     $ 0.39  
    Extraordinary item   $ -     $ -     $ -     $ (0.03 )
    Net income   $ 0.13     $ 0.27     $ 0.43     $ 0.36  
Weighted average shares outstanding:                                
  Basic     52,848,586       52,997,194       52,885,640       52,997,929  
  Diluted     56,254,632       56,357,096       56,365,316       56,475,441  
The accompanying notes are an integral part of these consolidated financial statements.  
   
   
GOLD RESOURCE CORPORATION  
(An Exploration Stage Company)  
CONSOLIDATED BALANCE SHEETS  
(U.S. dollars in thousands, except shares)  
             
             
    September 30,     December 31,  
    2012     2011  
    (unaudited)        
ASSETS            
Current assets:                
  Cash and cash equivalents   $ 36,242     $ 51,960  
  Gold and silver bullion     6,560       2,549  
  Accounts receivable     16,090       14,281  
  Inventories     5,086       4,243  
  Deferred tax assets     11,118       11,118  
  Prepaid expenses and other assets     701       957  
    Total current assets     75,797       85,108  
Land and mineral rights     227       227  
Property and equipment - net     12,959       10,318  
Inventories     890       -  
Deferred tax assets     19,517       19,517  
    Total assets   $ 109,390     $ 115,170  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 2,437     $ 1,691  
  Accrued expenses     4,314       4,879  
  IVA taxes payable     3,191       559  
  Income taxes payable     1,990       15,987  
  Dividends payable     3,170       2,645  
    Total current liabilities     15,102       25,761  
Asset retirement obligation     2,539       2,281  
    Total liabilities     17,641       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     112,201       132,529  
(Deficit) accumulated during the exploration stage     (15,021 )     (39,522 )
Treasury stock at cost, 186,991 shares     (3,449 )     (1,954 )
Other comprehensive (loss) - currency translation adjustment     (2,035 )     (3,978 )
    Total shareholders' equity     91,749       87,128  
    Total liabilities and shareholders' equity   $ 109,390     $ 115,170  
                 
The accompanying notes are an integral part of these consolidated financial statements.  
   
   
GOLD RESOURCE CORPORATION  
(An Exploration Stage Company)  
CONSOLIDATED STATEMENTS OF CASH FLOWS  
for the three and nine months ended September 30, 2012 and 2011  
(U.S. dollars in thousands)  
(Unaudited)  
                         
    Three months ended September 30,     Nine months ended September 30,  
    2012     2011     2012     2011  
                         
Cash flows from operating activities:                                
  Net income   $ 7,297     $ 15,218     $ 24,501     $ 20,390  
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                                
  Depreciation and amortization     600       181       1,117       511  
  Accretion     20       21       60       63  
  Stock-based compensation     1,980       1,771       6,640       4,670  
  Currency translation gain (loss)     2,168       (4,227 )     1,943       (3,843 )
  Unrealized (gain) loss from gold and silver bullion held     (1,073 )     287       (744 )     287  
  Realized loss from gold and silver bullion converted     19       -       109       -  
  Other     6       -       6       -  
Changes in operating assets and liabilities:                                
  Accounts receivable     (11,504 )     (12,137 )     (1,809 )     (13,549 )
  Inventories     (689 )     1,033       (1,733 )     (1,477 )
  Income tax receivable     712       -       -       -  
  Prepaid expenses and other assets     168       (797 )     256       (1,180 )
  Accounts payable     1,851       348       746       1,549  
  Accrued expenses     102       638       (565 )     116  
  IVA taxes payable     (485 )     3,621       2,632       5,451  
  Income taxes payable     1,990       9,131       (13,997 )     10,187  
Total adjustments     (4,135 )     (130 )     (5,339 )     2,785  
  Net cash provided by operating activities     3,162       15,088       19,162       23,175  
Cash flows from investing activities:                                
  Capital expenditures     (814 )     (1,955 )     (3,763 )     (5,044 )
  Purchases of gold and silver bullion     (525 )     (2,012 )     (4,707 )     (2,012 )
  Proceeds from conversion of gold and silver bullion     536       -       1,331       -  
  Net cash used in investing activities     (803 )     (3,967 )     (7,139 )     (7,056 )
Cash flows from financing activities:                                
  Dividends paid     (9,514 )     (6,890 )     (26,444 )     (17,490 )
  Treasury stock purchases     (1,495 )     (972 )     (1,495 )     (972 )
  Net cash (used in) financing activities     (11,009 )     (7,862 )     (27,939 )     (18,462 )
Effect of exchange rates on cash and equivalents     114       (343 )     198       (225 )
Net increase (decrease) in cash and cash equivalents     (8,536 )     2,916       (15,718 )     (2,568 )
Cash and equivalents at beginning of period     44,778       42,098       51,960       47,582  
Cash and equivalents at end of period   $ 36,242     $ 45,014     $ 36,242     $ 45,014  
Supplemental Cash Flow Information                                
                                 
Income taxes paid   $ 2,003     $ -     $ 30,395     $ -  
The accompanying notes are an integral part of these consolidated financial statements.  
   

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