SOURCE: Gold Resource Corporation

Gold Resource Corporation

October 31, 2017 16:35 ET

Gold Resource Corporation Reports Third Quarter Net Income of $0.08 per Share, Maintains 2017 Production Outlook

COLORADO SPRINGS, CO--(Marketwired - Oct 31, 2017) - Gold Resource Corporation (NYSE American: GORO) (the "Company or GRC") reported production results for the third quarter ended September 30, 2017 of 6,465 ounces of gold and 392,153 ounces of silver, which along with base metal revenue generated $31.1 million in net revenue and $4.6 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.

Q3 2017 HIGHLIGHTS

  • $4.6 million net income, or $0.08 per share
  • $31.1 million net sales
  • 6,465 gold ounces produced
  • 392,153 silver ounces produced
  • $2 total cash cost per gold equivalent ounce sold (after by-product credits)
  • $639 total all-in sustaining cost per precious metal gold equivalent ounce sold
  • $18.0 million base metal by-product credits, or $1,707 per precious metal gold ounce sold
  • $0.3 million dividend distributions, or $0.005 per share for quarter
  • $15.8 million cash and cash equivalents

Overview of Q3 2017 Results

Gold Resource Corporation's Aguila Project sold 10,573 precious metal gold equivalent ounces at a total cash cost of $2 per ounce (after by-product credits), benefiting from strong base metal production and sales. Average realized metal prices during the quarter included $1,289 per ounce gold and $17.00 per ounce silver*. The Company recorded net income of $4.6 million, or $0.08 per share. The Company paid $0.3 million to its shareholders in dividends, or $0.005 per share during the quarter. Cash and cash equivalents at quarter end totaled $15.8 million.

Production totals for the first nine months of 2017 included 18,908 ounces of gold, 1,217,713 ounces of silver, 804 tonnes of copper, 3,583 tonnes of lead and 11,447 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 nine months ended September 30, 2017 and 2016:

                         
Production and Sales Statistics
    Three months ended September 30,   Nine months ended September 30,
    2017   2016   2017   2016
Milled                        
  Tonnes Milled (1)     114,678     113,945     329,798     331,423
  Tonnes Milled per Day (2)     1,346     1,278     1,282     1,269
Grade                        
  Average Gold Grade (g/t)     2.09     1.86     2.10     2.36
  Average Silver Grade (g/t)     117     128     125     146
  Average Copper Grade (%)     0.35     0.24     0.32     0.31
  Average Lead Grade (%)     1.73     1.18     1.44     1.18
  Average Zinc Grade (%)     5.04     3.45     4.19     3.71
Recoveries                        
  Average Gold Recovery (%)     84     89     85     90
  Average Silver Recovery (%)     91     92     92     92
  Average Copper Recovery (%)     72     78     76     77
  Average Lead Recovery (%)     73     74     75     72
  Average Zinc Recovery (%)     80     82     83     84
Mill production (before payable metal deductions) (3)                        
  Gold (ozs.)     6,465     6,066     18,908     22,540
  Silver (ozs.)     392,153     431,335     1,217,713     1,437,975
  Copper (tonnes)     291     213     804     777
  Lead (tonnes)     1,449     1,000     3,583     2,847
  Zinc (tonnes)     4,628     3,232     11,447     10,306
Payable metal sold                        
  Gold (ozs.)     5,672     6,683     17,521     21,096
  Silver (ozs.)     371,754     410,337     1,121,870     1,337,668
  Copper (tonnes)     328     200     769     739
  Lead (tonnes)     1,389     893     3,299     2,629
  Zinc (tonnes)     4,326     2,480     9,452     8,503
Average metal prices realized (4)                        
  Gold ($ per oz.)     1,289     1,339     1,262     1,271
  Silver ($ per oz.)     17.00     20.79     17.33     17.45
  Copper ($ per tonne)     6,341     4,791     6,042     4,577
  Lead ($ per tonne)     2,349     1,908     2,293     1,808
  Zinc ($ per tonne)     2,936     2,421     2,790     2,012
Precious metal gold equivalent ounces produced (mill production) (3)                        
  Gold Ounces     6,465     6,066     18,908     22,540
  Gold Equivalent Ounces from Silver     5,172     6,697     16,722     19,741
  Total Precious Metal Gold Equivalent Ounces     11,637     12,763     35,630     42,281
Precious metal gold equivalent ounces sold                        
  Gold Ounces     5,672     6,683     17,521     21,096
  Gold Equivalent Ounces from Silver     4,901     6,371     15,411     18,364
  Total Precious Metal Gold Equivalent Ounces     10,573     13,054     32,932     39,460
  Total cash cost before by-product credits per precious metal gold equivalent ounce sold (5)   $ 1,709   $ 1,287   $ 1,353   $ 1,152
  Total cash cost after by-product credits per precious metal gold equivalent ounce sold (5)   $ 2   $ 623   $ 181   $ 511
  Total all-in sustaining cost per precious metal gold equivalent ounce sold (5)   $ 639   $ 757   $ 664   $ 765
  Total all-in cost per precious metal gold equivalent ounce sold (5)   $ 756   $ 902   $ 768   $ 919
                         
(1)   For the third quarter of 2017 and 2016 and first nine months of 2017 and 2016, this includes 2,108, 11,459, 42,079, and 38,764 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 deducts from payment. 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 nine months ended September 30, 2017 and 2016, its financial condition at September 30, 2017 and December 31, 2016 and its cash flows for the nine months ended September 30, 2017 and 2016. The summary data as of September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016 is unaudited; the summary data as of 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)  
                 
    September 30,     December 31,  
    2017     2016  
    (Unaudited)        
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 15,832     $ 14,166  
  Gold and silver rounds/bullion     3,831       3,307  
  Accounts receivable     3,664       630  
  Inventories, net     9,890       8,946  
  Income tax receivable, net     1,025       626  
  Prepaid expenses and other current assets     1,822       1,587  
    Total current assets     36,064       29,262  
Property, plant and mine development, net     79,447       70,059  
Deferred tax assets, net     18,645       17,580  
Other non-current assets     945       1,542  
    Total assets   $ 135,101     $ 118,443  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 8,883     $ 5,383  
  Loan payable, current     562       -  
  Mining royalty taxes payable     1,222       2,033  
  Accrued expenses and other current liabilities     2,165       1,526  
    Total current liabilities     12,832       8,942  
Reclamation and remediation liabilities     2,790       2,425  
Loan payable, long-term     1,789       -  
    Total liabilities     17,411       11,367  
Shareholders' equity:                
  Common stock - $0.001 par value, 100,000,000 shares authorized:                
    56,891,484 and 56,566,874 shares outstanding at September 30, 2017 and December 31, 2016, respectively     57       57  
  Additional paid-in capital     114,211       112,034  
  Retained earnings     10,477       2,040  
  Treasury stock at cost, 336,398 shares     (5,884 )     (5,884 )
  Accumulated other comprehensive loss     (1,171 )     (1,171 )
    Total shareholders' equity     117,690       107,076  
    Total liabilities and shareholders' equity   $ 135,101     $ 118,443  
                 
                 
   
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  
(U.S. dollars in thousands, except share and per share amounts)  
(Unaudited)  
   
                           
    Three months ended September 30,   Nine months ended September 30,  
    2017   2016   2017   2016  
                           
Sales, net   $ 31,122   $ 21,367   $ 76,849   $ 64,968  
Mine cost of sales:                          
  Production costs     16,122     12,767     39,634     34,570  
  Depreciation and amortization     3,762     3,189     10,271     9,049  
  Reclamation and remediation     37     48     101     139  
    Total mine cost of sales     19,921     16,004     50,006     43,758  
Mine gross profit     11,201     5,363     26,843     21,210  
Costs and expenses:                          
  General and administrative expenses     1,950     2,027     5,437     5,875  
  Exploration expenses     1,457     881     3,415     2,027  
  Other expense (income), net     110     74     1,183     (1,170 )
    Total costs and expenses     3,517     2,982     10,035     6,732  
Income before income taxes     7,684     2,381     16,808     14,478  
  Provision for income taxes     3,103     787     6,987     6,479  
Net income   $ 4,581   $ 1,594   $ 9,821   $ 7,999  
Net income per common share:                          
  Basic   $ 0.08   $ 0.03   $ 0.17   $ 0.15  
  Diluted   $ 0.08   $ 0.03   $ 0.17   $ 0.14  
Weighted average shares outstanding:                          
  Basic     56,888,115     55,781,382     56,841,897     54,994,430  
  Diluted     57,455,805     57,597,392     57,617,030     55,589,307  
                           
                           
   
GOLD RESOURCE CORPORATION  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  
(U.S. dollars in thousands)  
(Unaudited)  
   
                 
    Nine months ended September 30,  
    2017     2016  
                 
Cash flows from operating activities:                
    Net income   $ 9,821     $ 7,999  
    Adjustments to reconcile net income to net cash from operating activities:                
      Deferred income taxes     3,033       250  
      Depreciation and amortization     10,602       9,343  
      Stock-based compensation     877       997  
      Other operating adjustments     392       (531 )
    Changes in operating assets and liabilities:                
      Accounts receivable     (3,034 )     (2,092 )
      Inventories     (945 )     (657 )
      Prepaid expenses and other current assets     958       1,203  
      Accounts payable and other accrued liabilities     3,319       (2,774 )
      Mining royalty and income taxes payable/receivable     (1,556 )     3,690  
      Other noncurrent assets     36       64  
    Net cash provided by operating activities     23,503       17,492  
Cash flows from investing activities:                
      Capital expenditures     (20,382 )     (12,637 )
      Proceeds from the sale of equity investments     -       749  
      Other investing activities     (265 )     (315 )
      Net cash used in investing activities     (20,647 )     (12,203 )
Cash flows from financing activities:                
      Proceeds from the exercise of stock options     -       391  
      Dividends paid     (852 )     (818 )
      Repayment of loan payable     (46 )     -  
      Repayment of capital leases     (21 )     (606 )
    Net cash used in financing activities     (919 )     (1,033 )
Effect of exchange rate changes on cash and cash equivalents     (271 )     (13 )
Net increase in cash and cash equivalents     1,666       4,243  
Cash and cash equivalents at beginning of period     14,166       12,822  
Cash and cash equivalents at end of period   $ 15,832     $ 17,065  
Supplemental Cash Flow Information                
  Income and mining taxes paid   $ 2,764     $ 256  
Non-cash investing activities:                
    Increase (decrease) in accrued capital expenditures   $ 510     $ (2,764 )
    Equipment purchased through loan payable     2,397       -  
    Equipment purchased under capital lease     21       300  
    Common stock issued for the acquisition of mineral rights   $ 1,300     $ 13,910  
                 
                 

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 56,891,484 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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