Golden Minerals Company ("Golden Minerals", "Golden" or the "Company") (NYSE:AUMN, TSX:AUMN) today provided financial results and a business summary for the quarter ending June 30, 2022.
Second Quarter Financial Results - Highlights
(All currency expressed in approximate USD)
- Revenue of $5.9 million yielding a net operating margin of $1.3 million in the second quarter 2022, vs. $5.9 million revenue and a net operating margin of $2.5 million in the second quarter 2021, both from mining operations at the Company's Rodeo gold-silver mine in Mexico.
- $9.5 million cash and cash equivalents balance as of June 30, 2022, compared to $12.2 million as of December 31, 2021.
- Net loss of $0.02 per share or $2.8 million in the second quarter 2022, compared to a net loss of $0.00 per share or $0.8 million in the second quarter 2021.
Second Quarter Business Summary
- At the Rodeo mine, produced 3,004 payable gold ounces and 12,768 payable silver ounces (3,158 gold equivalent ("AuEq") ounces) with total cash costs, net of silver by-product credits, per payable ounce of gold of $1,426.1 Cash costs were higher than the $1,164 reported in Q1 2022 due to lower grade than normal mined during the month of April, in addition to increased drilling and blasting activity which will benefit third quarter production.
- Sold 3,219 AuEq oz. in doré at average prices (before selling and refining costs) of $1,865/oz Au and $22.49/oz Ag. Doré inventory at June 30, 2022 consisted of 323 payable oz. Au and 1,009 payable oz. Ag.
- Continued limited scale test mining activities at the Velardeña Properties, conducted to complement final optimization of a bio-oxidation plant design and for use in additional flotation separation studies. Test results using the bio-oxidation pre-treatment oxidation process continue to support the use of the technology in future processing at Velardeña.
- Conducted additional test mining at Velardeña beginning in May 2022 using a new contractor to evaluate productivity and dilution of resue mining on the principal veins accessible from the San Mateo decline. Results met expected productivity metrics but did not meet targeted dilution metrics for some of the veins mined. The Company is therefore continuing to evaluate modified mine plans and mining techniques to address dilution issues during the current downturn in gold and silver prices.
- In July 2022, completed a third drill program of 5,693 meters in 24 drill holes at the Yoquivo gold-silver project located in Chihuahua State, Mexico. This drill program was conducted to further delineate previously encountered vein-hosted mineralized intervals. Complete assay results have not yet been received; however, the Company anticipates this round of drilling will provide sufficient information with which to estimate an initial gold-silver resource later in 2022.
- Completed a second drill program at the Sarita Este gold-copper project (Salta Province, Argentina) in June 2022; recently released assay results from the program point to a potentially economic shallow oxidized gold system.
- In June 2022, Barrick reported results of a 5-hole 1,300m initial drill program at our El Quevar property to the Company. Vuggy silica alteration, which is commonly associated with high sulfidation epithermal Au-Ag deposits, was noted in all holes. Final assay results are pending.
1 Gold equivalents are based on actual gold and silver prices realized during the second quarter 2022: $1,865/oz Au and $22.49/oz Ag. "Cash costs, net of by-product credits, per payable gold ounce" is a non-GAAP financial measure. For further information, see "Non-GAAP Financial Measures" below.
Golden's President and Chief Executive Officer, Warren Rehn, commented on the quarter's results, "Our production at Rodeo continues on plan and is providing good cash flow while we continue to work on the re-start of Velardeña. At Velardeña our recent test-mining showed excellent progress on productivity; however, the dilution control was not up to expectations, mostly due to geologic factors on the San Mateo vein. We will take the time required to resolve this through modifications in the mine plan. I expect we will be in a good position once again to propose the re-start late this year or early next year."
Second Quarter 2022 Financial Results
The Company reported revenue of $5.9 million from doré sales, $4.6 million costs of metals sold and $1.3 million in net operating margin in the second quarter 2022, all related to gold-silver production at the Rodeo mine. Exploration expenses, including property holding costs and allocated administrative expenses, totaled $2.8 million during the quarter. Expenses were primarily related to costs in support of the potential restart of Velardeña, as well as increased exploration activities at the Rodeo operation in Mexico and the Sarita Este property in Argentina. Velardeña care and maintenance expenses were $0.1 million in the quarter and include expenses related to care and maintenance as a result of the suspension of mining and processing activities in November 2015. El Quevar project expense was $0.2 million during the second quarter and includes holding and evaluation costs for the Yaxtché deposit at El Quevar, net of reimbursements from Barrick Gold under the terms of an Earn-In Agreement. Administrative expenses totaled $1.3 million and include costs associated with being a public company that are incurred primarily by the Company's corporate activities in support of the Rodeo Property, the Velardeña Properties, the El Quevar project and the Company's exploration portfolio. The Company reported a net loss of $2.8 million or $0.02 per share.
Twelve-Month Financial Outlook
The Company ended the second quarter of 2022 with a cash balance of $9.5 million and anticipates receiving approximately $4.5 to $6.5 million in net operating margin (defined as revenue from the sale of metals less costs of metals sold) from the Rodeo operation during the 12 months ending June 30, 2023, assuming average gold and silver prices during that period of $1,800/oz and $25.00/oz, respectively. The Company also anticipates receiving $1.5 million of the remaining $2.0 million due from Fabled Silver Gold Corp. related to the sale of the Company's Santa Maria property during the 12-month period.
Currently forecasted expenditures during the 12 months ending June 30, 2023, apart from Rodeo costs of metals sold which are included in the net operating margin forecast, total approximately $10.4 million as follows:
- $5.1 million on exploration activities and property holding costs associated with the Company's portfolio of exploration properties located in Mexico, Argentina and Nevada, including project assessment and evaluation costs relating to additional exploration at Rodeo and Yoquivo, as well as costs associated with the potential restart of Velardeña;
- $1.0 million at the Velardeña Properties for care and maintenance;
- $0.4 million at the El Quevar project to fund care and maintenance and property holding costs, net of reimbursement from Barrick; and
- $3.9 million in general and administrative costs.
Additional information regarding second quarter 2022 financial results can be found in the Company's 10-Q Quarterly Report which is available on the Golden Minerals website at www.goldenminerals.com.
Quarterly Conference Call and Webcast
Management will be hosting a conference call and webcast on Monday, August 15, 2022 at 11:00 a.m. Eastern Daylight Time ("EDT") to discuss second quarter 2022 financial results and recent project updates. You are invited to join the webcast at Golden Minerals Q2 2022 Earnings Call. Please plan to join 10 minutes prior to the start time.
The webcast will also be available for replay on the Golden Minerals website at http://www.goldenminerals.com after August 15, 2022.
About Golden Minerals
Golden Minerals is a growing gold and silver producer based in Golden, Colorado. The Company is primarily focused on producing gold and silver from its Rodeo Mine and advancing its Velardeña Properties in Mexico and, through partner funded exploration, its El Quevar silver property in Argentina, as well as acquiring and advancing selected mining properties in Mexico, Nevada and Argentina.
Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
(US Dollars, unaudited) |
||||||||
| December 31, | ||||||||
| June 30, | 2021 |
|||||||
2022 |
(Restated)* | |||||||
| (in thousands, except share data) | ||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 9,517 |
|
$ | 12,229 |
|
||
| Short-term investments | 53 |
|
67 |
|
||||
| Inventories, net | 1,785 |
|
1,608 |
|
||||
| Value added tax receivable, net | 1,670 |
|
1,290 |
|
||||
| Prepaid expenses and other assets | 1,168 |
|
1,145 |
|
||||
| Total current assets | 14,193 |
|
16,339 |
|
||||
| Property, plant and equipment, net | 6,479 |
|
6,627 |
|
||||
| Other long-term assets | 646 |
|
747 |
|
||||
| Total assets | $ | 21,318 |
|
$ | 23,713 |
|
||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other accrued liabilities | $ | 4,097 |
|
$ | 3,509 |
|
||
| Deferred revenue | 719 |
|
1,469 |
|
||||
| Other current liabilities | 441 |
|
721 |
|
||||
| Total current liabilities | 5,257 |
|
5,699 |
|
||||
| Asset retirement and reclamation liabilities | 3,739 |
|
3,569 |
|
||||
| Other long-term liabilities | 189 |
|
353 |
|
||||
| Total liabilities | 9,185 |
|
9,621 |
|
||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Common stock, $.01 par value, 350,000,000 shares authorized; 167,427,992 and 162,804,612 shares issued and outstanding respectively | 1,674 |
|
1,628 |
|
||||
| Additional paid in capital | 541,642 |
|
540,518 |
|
||||
| Accumulated deficit | (531,183 |
) |
(528,054 |
) |
||||
| Shareholders' equity | 12,133 |
|
14,092 |
|
||||
| Total liabilities and equity | $ | 21,318 |
|
$ | 23,713 |
|
||
* See Note 3, "Notes to the Condensed Consolidated Financial Statements" in the Form 10-Q.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||||||||||
(US dollars, unaudited) |
||||||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
2022 |
|
2021 |
|
2022 |
|
2021 |
|
|||||||||
| (in thousands except per share data) | (in thousands, except per share data) | |||||||||||||||
| Revenue: | ||||||||||||||||
| Sale of metals | $ | 5,926 |
|
$ | 5,861 |
|
$ | 13,432 |
|
$ | 7,639 |
|
||||
| Total revenue | 5,926 |
|
5,861 |
|
13,432 |
|
7,639 |
|
||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of metals sold (exclusive of depreciation shown below) | (4,639 |
) |
(3,328 |
) |
(8,961 |
) |
(4,864 |
) |
||||||||
| Exploration expense | (2,799 |
) |
(1,094 |
) |
(4,662 |
) |
(1,875 |
) |
||||||||
| El Quevar project expense | (177 |
) |
(53 |
) |
(294 |
) |
(159 |
) |
||||||||
| Velardeña care and maintenance costs | (134 |
) |
(141 |
) |
(473 |
) |
(340 |
) |
||||||||
| Administrative expense | (1,275 |
) |
(992 |
) |
(2,548 |
) |
(2,540 |
) |
||||||||
| Stock based compensation | (200 |
) |
(987 |
) |
(349 |
) |
(1,416 |
) |
||||||||
| Reclamation expense | (71 |
) |
(63 |
) |
(140 |
) |
(129 |
) |
||||||||
| Other operating income (expense), net | 502 |
|
135 |
|
890 |
|
334 |
|
||||||||
| Depreciation and amortization | (87 |
) |
(168 |
) |
(152 |
) |
(323 |
) |
||||||||
| Total costs and expenses | (8,880 |
) |
(6,691 |
) |
(16,689 |
) |
(11,312 |
) |
||||||||
| Loss from operations | (2,954 |
) |
(830 |
) |
(3,257 |
) |
(3,673 |
) |
||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other expense, net | (36 |
) |
(15 |
) |
(14 |
) |
(323 |
) |
||||||||
| Gain (loss) on foreign currency transactions | 48 |
|
102 |
|
98 |
|
23 |
|
||||||||
| Total other income (loss) | 12 |
|
87 |
|
84 |
|
(300 |
) |
||||||||
| Loss from operations before income taxes | (2,942 |
) |
(743 |
) |
(3,173 |
) |
(3,973 |
) |
||||||||
| Income taxes | 129 |
|
(67 |
) |
44 |
|
(15 |
) |
||||||||
| Net Loss | $ | (2,813 |
) |
$ | (810 |
) |
$ | (3,129 |
) |
$ | (3,988 |
) |
||||
| Net income (loss) per common share — basic | ||||||||||||||||
| Loss | $ | (0.02 |
) |
$ | - |
|
$ | (0.02 |
) |
$ | (0.02 |
) |
||||
| Weighted average Common Stock outstanding - basic (1) | 165,109,309 |
|
162,365,584 |
|
163,817,471 |
|
161,382,645 |
|
||||||||
Non-GAAP Financial Measures
"Total cash costs, net of by-product credits, per payable gold ounce," is a non-GAAP measure, and includes all direct and indirect operating cash costs associated with the physical activities that would generate doré products for sale to customers, including mining to gain access to mineralized materials, mining of mineralized materials and waste, milling, third-party related treatment, refining and transportation costs, on-site administrative costs and royalties. Total cash costs do not include depreciation, depletion, amortization, exploration expenditures, reclamation and remediation costs, sustaining capital, financing costs, income taxes, or corporate general and administrative costs not directly or indirectly related to the Rodeo project. By-product credits include revenues from silver contained in the products sold to customers during the period. "Total cash costs, net of by-product credits", are divided by the number of payable gold ounces generated by the plant for the period to arrive at "Total cash costs, net of by-product credits, per payable gold ounce."
"Cost of metals sold", reported as a separate line item in the Company's Condensed Consolidated Statements of Operations for the three months and six months ended June 30, 2022, is the most comparable financial measure, calculated in accordance with GAAP, to "Total cash costs, net of by-product credits". "Cost of metals sold" includes adjustments for changes in inventory and excludes third-party related treatment and refining costs, which are reported as part of revenue in accordance with GAAP. The following table presents a reconciliation for the three months and six months ended June 30, 2022 between the non-GAAP measure of "Total cash cost, net of by-product credits" to the most directly comparable GAAP measure, "Cost of metals sold".
| Reconciliation of Costs of Metals Sold (GAAP) to Total Cash Costs, net of By-product Credits (Non-GAAP) |
||||
| (in thousands) | ||||
| Three Months Ended June 30, 2022 | ||||
| Total cash costs, net of by-product credits | $ | 4,284 |
|
|
| Reconciliation to GAAP measure: | ||||
| Treatment and refining costs | $ | (83 |
) |
|
| Silver by-product credits | 296 |
|
||
| Write down of inventories to net realizable value | — |
|
||
| Change in inventory (excluding depreciation, depletion and amortization) | 142 |
|
||
| Cost of metals sold | $ | 4,639 |
|
|
| Six Months Ended June 30, 2022 | ||||
| Total cash costs, net of by-product credits | $ | 8,485 |
|
|
| Reconciliation to GAAP measure: | ||||
| Treatment and refining costs | $ | (212 |
) |
|
| Silver by-product credits | 647 |
|
||
| Write down of inventories to net realizable value | — |
|
||
| Change in inventory (excluding depreciation, depletion and amortization) | 41 |
|
||
| Cost of metals sold | $ | 8,961 |
|
|
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended, and applicable Canadian securities legislation, including statements regarding the possibility of estimating an initial gold-silver resource in 2022 at the Yoquivo gold-silver project; a potentially economic shallow oxidized gold system at the Sarita Este gold-copper project; anticipated net operating margin from the Rodeo operation during the 12 months ending June 30, 2023; the receipt of the expected final installment due to Golden Minerals from Fabled Silver Gold Corp.; and forecasted expenditures during the 12 months ending June 30, 2023. These statements are subject to risks and uncertainties, including the overall impact of the COVID-19 pandemic, including the potential future re-suspension of non-essential activities in Mexico, including mining; lower than anticipated revenue or higher than anticipated costs at the Rodeo mine, and mine testing activities at Velardeña; declines in general economic conditions; changes in political conditions, in tax, royalty, environmental and other laws in the United States, Mexico or Argentina and other market conditions; and fluctuations in silver and gold prices. Golden Minerals assumes no obligation to update this information. Additional risks relating to Golden Minerals may be found in the periodic and current reports filed with the SEC by Golden Minerals, including the Company's Annual Report on Form 10-K for the year ended December 31, 2021.
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