SOURCE: Gold Resource Corporation

Gold Resource Corporation

November 02, 2016 16:18 ET

Gold Resource Corporation Reports Third Quarter Net Income of $1.6 Million, or $0.03 per Share; Maintains 2016 Production Outlook

COLORADO SPRINGS, CO--(Marketwired - Nov 2, 2016) - Gold Resource Corporation (NYSE MKT: GORO) (the "Company") reported production results for the third quarter ended September 30, 2016 of 6,066 ounces of gold and 431,335 ounces of silver, which along with base metal revenue generated $21.4 million in net revenue and $1.6 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, 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 into physical gold and silver and take delivery.

2016 Q3 HIGHLIGHTS

  • 6,066 gold ounces produced
  • 431,335 silver ounces produced
  • $21.4 million net sales
  • $1.6 million net income
  • $623 total cash cost per gold equivalent ounce (after by-product credits)
  • $8.7 million adjusted cash flow from mine site operations
  • $8.7 million by-product credits, or $664 per ounce sold
  • $0.3 million dividend distributions, or $0.005 per share for quarter
  • $17.1 million cash and cash equivalents
  • Purchased 100% interest in the Isabela Pearl development project in Nevada, USA
  • Purchased 100% interest in the Mina Gold exploration property in Nevada, USA

Overview of Q3 2016 Results

Gold Resource Corporation's Aguila Project sold 13,054 gold equivalent ounces at a total cash cost of $623 per ounce (after by-product credits). Realized average metal price sales during the quarter were $1,339 per ounce gold and $20.79 per ounce silver. The Company recorded net income of $1.6 million, or $0.03 per share. Adjusted cash flow from mine site operations totaled $8.7 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 $17.1 million. Realized gold and silver prices increased 20% and 43%, respectively, compared to the third quarter of 2015.

Production for the first three quarters of 2016 included 22,540 ounces of gold and 1,437,975 ounces of silver. The Company maintains its 2016 Annual Outlook, targeting a plus or minus 5 percent production, 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.

As previously announced, during the third quarter, the Company purchased a 100% interest in the Isabella Pearl high-grade gold potential open pit heap leach project located in Nevada, U.S.A. An earlier study completed by a third-party reported that the project contains Proven and Probable Reserves of 191,400 gold ounces at an average grade of 2.18 grams per tonne (g/t) and it is in advanced stages of engineering and mine permitting. The Company also acquired the Mina Gold property located in Mineral County, Nevada. The Mina Gold property contains an historic third-party estimate of mineralized material totaling 1,606,000 tonnes grading 1.88 gram per tonne (g/t) gold.

The following Production and Sales Statistics table summarizes certain information about our mining operations for the three and nine months ended September 30, 2016 and 2015:

 
Production and Sales Statistics
 
                 
    Three months ended September 30,   Nine months ended September 30,
    2016   2015   2016   2015
Milled                        
  Tonnes Milled (1)     113,945     105,309     331,423     300,190
  Tonnes Milled per Day (2)     1,278     1,143     1,269     1,104
Grade                        
  Average Gold Grade (g/t)     1.86     2.25     2.36     2.52
  Average Silver Grade (g/t)     128     180     146     216
  Average Copper Grade (%)     0.24     0.41     0.31     0.39
  Average Lead Grade (%)     1.18     1.41     1.18     1.37
  Average Zinc Grade (%)     3.45     4.02     3.71     3.78
Recoveries                        
  Average Gold Recovery (%)     89     90     90     90
  Average Silver Recovery (%)     92     92     92     93
  Average Copper Recovery (%)     78     80     77     79
  Average Lead Recovery (%)     74     75     72     75
  Average Zinc Recovery (%)     82     83     84     82
Mill production (before payable metal deductions) (3)                        
  Gold (ozs.)     6,066     6,825     22,540     21,960
  Silver (ozs.)     431,335     561,985     1,437,975     1,932,611
  Copper (tonnes)     213     343     777     929
  Lead (tonnes)     1,000     1,114     2,847     3,071
  Zinc (tonnes)     3,232     3,499     10,306     9,299
Payable metal sold                        
  Gold (ozs.)     6,683     6,220     21,096     21,994
  Silver (ozs.)     410,337     503,929     1,337,668     1,770,093
  Copper (tonnes)     200     332     739     877
  Lead (tonnes)     893     1,049     2,629     2,875
  Zinc (tonnes)     2,480     2,905     8,503     7,668
Average metal prices realized (4)                        
  Gold ($ per oz.)     1,339     1,115     1,271     1,177
  Silver ($ per oz.)     20.79     14.50     17.45     16.09
  Copper ($ per tonne)     4,791     4,883     4,577     5,436
  Lead ($ per tonne)     1,908     1,619     1,808     1,746
  Zinc ($ per tonne)     2,421     1,701     2,012     1,981
Precious metal gold equivalent ounces produced (mill production) (3)                        
  Gold Ounces     6,066     6,825     22,540     21,960
  Gold Equivalent Ounces from Silver     6,697     7,308     19,741     26,410
  Total Precious Metal Gold Equivalent Ounces     12,763     14,133     42,281     48,370
Precious metal gold equivalent ounces sold                        
  Gold Ounces     6,683     6,220     21,096     21,994
  Gold Equivalent Ounces from Silver     6,371     6,553     18,364     24,189
  Total Precious Metal Gold Equivalent Ounces     13,054     12,773     39,460     46,183
  Total cash cost before by-product credits per precious metal gold equivalent ounce sold (5)   $ 1,287   $ 1,250   $ 1,152   $ 1,046
  Total cash cost after by-product credits per precious metal gold equivalent ounce sold (5)   $ 623   $ 603   $ 511   $ 505
  Total all-in sustaining cost per precious metal gold equivalent ounce sold (5)   $ 907   $ 1,516   $ 910   $ 1,027
  Total all-in cost per precious metal gold equivalent ounce sold (5)   $ 1,021   $ 1,736   $ 1,027   $ 1,287
   
(1) For the third quarter and first nine months of 2016, this includes 11,459 and 38,764 tonnes, respectively of low-grade stockpile 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 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 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, 2016 and 2015, its financial condition at September 30, 2016 and December 31, 2015 and its cash flows for the nine months ended September 30, 2016 and 2015. The summary data for the three and nine months ended September 30, 2016 is unaudited; the summary data as of 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)
             
             
    September 30,     December 31,  
    2016     2015  
    (Unaudited)        
ASSETS                
Current assets:                
  Cash and cash equivalents   $ 17,065     $ 12,822  
  Gold and silver rounds/bullion     3,876       2,988  
  Accounts receivable     2,414       321  
  Inventories     9,409       8,753  
  Income tax receivable     937       3,794  
  Prepaid expenses and other current assets     1,693       3,940  
    Total current assets     35,394       32,618  
Property, plant and mine development, net     70,959       51,637  
Deferred tax assets     15,055       21,064  
Other non-current assets     1,547       1,216  
    Total assets   $ 122,955     $ 106,535  
LIABILITIES AND SHAREHOLDERS' EQUITY                
Current liabilities:                
  Accounts payable   $ 5,433     $ 11,600  
  Mining royalty taxes payable     1,079       230  
  Accrued expenses and other current liabilities     2,596       3,072  
    Total current liabilities     9,108       14,902  
Reclamation and remediation liabilities     2,554       2,815  
    Total liabilities     11,662       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: 56,903,272 and 56,566,874 shares issued and outstanding, respectively, at September 30, 2016 and 54,603,104 and 54,266,706 shares issued and outstanding, respectively, at December 31, 2015     57       55  
  Additional paid-in capital     111,790       96,766  
  Accumulated retained earnings (deficit)     6,501       (948 )
  Treasury stock at cost, 336,398 shares     (5,884 )     (5,884 )
  Accumulated other comprehensive loss     (1,171 )     (1,171 )
    Total shareholders' equity     111,293       88,818  
    Total liabilities and shareholders' equity   $ 122,955     $ 106,535  
                     
                     
 
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,  
    2016     2015     2016   2015  
                               
Sales, net   $ 21,367     $ 19,437     $ 64,968   $ 71,082  
Mine cost of sales:                              
  Production costs     12,767       13,411       34,570     40,462  
  Depreciation and amortization     3,189       1,579       9,049     5,195  
  Reclamation and remediation     48       6       139     36  
    Total mine cost of sales     16,004       14,996       43,758     45,693  
Mine gross profit     5,363       4,441       21,210     25,389  
Costs and expenses:                              
  General and administrative expenses     2,027       2,913       5,875     8,032  
  Exploration expenses     881       1,810       2,027     6,416  
    Total costs and expenses     2,908       4,723       7,902     14,448  
Operating income (loss)     2,455       (282 )     13,308     10,941  
Other (expense) income, net     (74 )     (1,033 )     1,170     (2,080 )
Income (loss) before income taxes     2,381       (1,315 )     14,478     8,861  
  Provision for income taxes     787       (846 )     6,479     3,465  
Net income (loss)   $ 1,594     $ (469 )   $ 7,999   $ 5,396  
Net income (loss) per common share:                              
  Basic   $ 0.03     $ (0.01 )   $ 0.15   $ 0.10  
  Diluted   $ 0.03     $ (0.01 )   $ 0.14   $ 0.10  
Weighted average shares outstanding:                              
  Basic     55,781,382       54,179,369       54,994,430     54,179,369  
  Diluted     57,597,392       54,179,369       55,589,307     54,201,274  
                                 
                                 
 
GOLD RESOURCE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (U.S. dollars in thousands)
(Unaudited)
 
         
  Nine months ended September 30,  
  2016   2015  
         
Cash flows from operating activities:            
  Net income $ 7,999   $ 5,396  
  Adjustments to reconcile net income to net cash from operating activities:            
    Deferred income taxes   250     (1,522 )
    Depreciation, depletion and amortization   9,343     6,331  
    Stock-based compensation   997     3,293  
    Other operating adjustments   (531 )   2,472  
  Changes in operating assets and liabilities:            
    Accounts receivable   (2,092 )   (435 )
    Inventories   (657 )   (1,149 )
    Prepaid expenses and other current assets   1,203     (897 )
    Accounts payable and other accrued liabilities   (2,774 )   5,069  
    Mining royalty and income taxes payable/receivable   3,690     (4,528 )
    Other noncurrent assets   64     466  
  Net cash provided by operating activities   17,492     14,496  
Cash flows from investing activities:            
    Capital expenditures   (12,637 )   (21,837 )
    Proceeds from the sale of equity investments   749     -  
    Other investing activities   (315 )   40  
  Net cash used in investing activities   (12,203 )   (21,797 )
Cash flows from financing activities:            
    Proceeds from the exercise of stock options   391     -  
    Dividends paid   (818 )   (4,876 )
    Repayment of capital leases   (606 )   (1,123 )
  Net cash used in financing activities   (1,033 )   (5,999 )
Effect of exchange rate changes on cash and cash equivalents   (13 )   (136 )
Net increase (decrease) in cash and cash equivalents   4,243     (13,436 )
Cash and cash equivalents at beginning of period   12,822     27,541  
Cash and cash equivalents at end of period $ 17,065   $ 14,105  
Supplemental Cash Flow Information            
  Interest expense paid $ 13   $ 65  
  Income and mining taxes paid $ 256   $ 8,464  
Non-cash investing activities:            
    Common stock issued for the acquisition of Walker Lane Minerals Corp $ 13,060   $ -  
    Common stock issued for the acquisition of the Mina Gold property $ 850   $ -  
                 

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 56,566,874 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.

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