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 September 30, 2022.
Third Quarter Financial Results - Highlights
(All currency expressed in approximate USD)
- Revenue of $5.3 million yielding a net operating margin of $0.9 million in the third quarter 2022, vs. $8.5 million revenue and a net operating margin of $4.2 million in the third quarter 2021, both from mining operations at the Company's Rodeo gold-silver mine in Mexico.
- $6.5 million cash and cash equivalents balance as of September 30, 2022, compared to $12.2 million as of December 31, 2021.
- Net loss of $0.02 per share or $2.7 million in the third quarter 2022, compared to a net gain of $0.00 per share or $0.4 million in the third quarter 2021.
Third Quarter Business Summary
- The Rodeo mine (Mexico) produced 2,972 payable gold ounces and 11,907 payable silver ounces (3,103 gold equivalent ("AuEq") ounces) with total cash costs, net of silver by-product credits, per payable ounce of gold of $1,391.1
- Sold 3,145 AuEq oz. in doré at average prices of $1,703/oz Au and $18.72/oz Ag (before costs of selling and refining). Doré inventory on September 30, 2022, consisted of 277 payable gold ounces and 1,309 payable silver ounces.
- At the Velardeña Properties (Mexico), the Company continued its evaluation of modified mine plans and mining techniques to address dilution issues encountered during 1H 2022 test-mining activities. The Company also began testing ore sorting technology in the third quarter 2022 to evaluate its potential application at the Velardeña Properties.
- At the Yoquivo gold prospect (Mexico), the Company completed a third drill program of 5,693 meters in 24 drill holes in July 2022 and is currently conducting a fourth drill program of approximately 3,000 meters. The Company plans to complete a maiden resource estimate for the property for release in the first quarter 2023.
- Completed additional drilling at the Sarita Este gold prospect (Salta, Argentina) for a project total since inception of 4,925 meters in 51 core drill holes.
1 Gold equivalents are based on actual gold and silver prices realized during the third quarter 2022. "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.
Third Quarter 2022 Financial Results
The Company reported revenue of $5.3 million from doré sales, $4.4 million costs of metals sold and $0.9 million in net operating margin in the third quarter 2022, all related to gold-silver production at the Rodeo mine. Exploration expenses, including property holding costs and allocated administrative expenses, totaled $2.4 million during the quarter. Exploration expenses were primarily related to costs to increase the capacity of the tailings dam at Velardeña to support processing of the Rodeo mineralized material, costs in support of the potential restart of Velardeña, exploration activities at the Yoquivo project in Mexico, and exploration activities at the Sarita Este project in Argentina. Velardeña care and maintenance expenses were $0.4 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 third 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 $0.9 million and include costs associated with being a public company that were 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 $2.7 million or $0.02 per share.
Twelve-Month Financial Outlook
The Company ended the third quarter of 2022 with a cash balance of $6.5 million and anticipates receiving approximately $5.5 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 September 30, 2023, assuming average gold and silver prices during that period of $1,800/oz and $25.00/oz, respectively. Current commodity prices have recently fallen below these thresholds and there is no assurance that our expectations regarding future prices will be realized. At average gold and silver prices of $1,700/oz and $20.00/oz, respectively, our expected net operating margin for the 12 months ending September 30, 2023 would decrease by approximately $1.5 million. The Company also anticipates receiving $1.75 million 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 September 30, 2023, apart from Rodeo costs of metals sold which are included in the net operating margin forecast, total approximately $9.6 million as follows:
- $4.3 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 for exploration at Rodeo and Yoquivo, plus costs associated with the potential restart of Velardeña and costs to increase its tailings facility which processes Rodeo's mineralized material;
- $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 third 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 this morning, Thursday, November 10, 2022, at 11:00 a.m. Eastern Time ("ET") to discuss third quarter 2022 financial results and recent project updates. You are invited to join the webcast at Q3 2022 AUMN Quarterly Conference Call and Webcast. 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 November 10, 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, |
||||||
September 30, |
|
2021 |
||||||
2022 |
|
(Restated)* |
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(in thousands, except share data) |
||||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 6,504 |
|
$ | 12,229 |
|
||
| Short-term investments | 35 |
|
67 |
|
||||
| Inventories, net | 1,786 |
|
1,608 |
|
||||
| Value added tax receivable, net | 1,770 |
|
1,290 |
|
||||
| Prepaid expenses and other assets | 1,182 |
|
1,145 |
|
||||
| Total current assets | 11,277 |
|
16,339 |
|
||||
| Property, plant and equipment, net | 6,404 |
|
6,627 |
|
||||
| Investments | 225 |
|
— |
|
||||
| Other long-term assets | 643 |
|
747 |
|
||||
| Total assets | $ | 18,549 |
|
$ | 23,713 |
|
||
| Liabilities and Equity | ||||||||
| Current liabilities | ||||||||
| Accounts payable and other accrued liabilities | $ | 4,345 |
|
$ | 3,509 |
|
||
| Deferred revenue | 344 |
|
1,469 |
|
||||
| Other current liabilities | 276 |
|
721 |
|
||||
| Total current liabilities | 4,965 |
|
5,699 |
|
||||
| Asset retirement and reclamation liabilities | 3,805 |
|
3,569 |
|
||||
| Other long-term liabilities | 149 |
|
353 |
|
||||
| Total liabilities | 8,919 |
|
9,621 |
|
||||
| Commitments and contingencies | ||||||||
| Equity | ||||||||
| Common stock, $.01 par value, 350,000,000 shares authorized; 167,477,992 and 162,804,612 shares issued and outstanding respectively | 1,675 |
|
1,628 |
|
||||
| Additional paid-in capital | 541,835 |
|
540,518 |
|
||||
| Accumulated deficit | (533,880 |
) |
(528,054 |
) |
||||
| Shareholders' equity | 9,630 |
|
14,092 |
|
||||
| Total liabilities and equity | $ | 18,549 |
|
$ | 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) |
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Three Months Ended |
|
Nine Months Ended |
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September 30, |
|
September 30, |
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2022 |
|
2021 |
|
2022 |
|
2021 |
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(in thousands except per share data) |
|
(in thousands, except per share data) |
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| Revenue: | ||||||||||||||||
| Sale of metals | $ | 5,268 |
|
$ | 8,479 |
|
$ | 18,700 |
|
$ | 16,118 |
|
||||
| Total revenue | 5,268 |
|
8,479 |
|
18,700 |
|
16,118 |
|
||||||||
| Costs and expenses: | ||||||||||||||||
| Cost of metals sold (exclusive of depreciation shown below) | (4,374 |
) |
(4,292 |
) |
(13,335 |
) |
(9,156 |
) |
||||||||
| Exploration expense | (2,376 |
) |
(2,146 |
) |
(7,038 |
) |
(4,021 |
) |
||||||||
| El Quevar project expense | (154 |
) |
(90 |
) |
(448 |
) |
(249 |
) |
||||||||
| Velardeña care and maintenance costs | (370 |
) |
(414 |
) |
(843 |
) |
(754 |
) |
||||||||
| Administrative expense | (918 |
) |
(911 |
) |
(3,466 |
) |
(3,451 |
) |
||||||||
| Stock-based compensation | (194 |
) |
(75 |
) |
(543 |
) |
(1,491 |
) |
||||||||
| Reclamation expense | (71 |
) |
(67 |
) |
(211 |
) |
(196 |
) |
||||||||
| Other operating income, net | 384 |
|
138 |
|
1,274 |
|
472 |
|
||||||||
| Depreciation and amortization | (89 |
) |
(143 |
) |
(241 |
) |
(466 |
) |
||||||||
| Total costs and expenses | (8,162 |
) |
(8,000 |
) |
(24,851 |
) |
(19,312 |
) |
||||||||
| (Loss) income from operations | (2,894 |
) |
479 |
|
(6,151 |
) |
(3,194 |
) |
||||||||
| Other income (expense): | ||||||||||||||||
| Interest and other expense, net | (3 |
) |
(13 |
) |
(17 |
) |
(336 |
) |
||||||||
| Gain on foreign currency transactions | 154 |
|
133 |
|
252 |
|
156 |
|
||||||||
| Total other income (expense) | 151 |
|
120 |
|
235 |
|
(180 |
) |
||||||||
| (Loss) gain from operations before income taxes | (2,743 |
) |
599 |
|
(5,916 |
) |
(3,374 |
) |
||||||||
| Income taxes | 46 |
|
(188 |
) |
90 |
|
(203 |
) |
||||||||
| Net (loss) income | $ | (2,697 |
) |
$ | 411 |
|
$ | (5,826 |
) |
$ | (3,577 |
) |
||||
| Net (loss) income per common share - basic | $ | (0.02 |
) |
$ | 0.00 |
|
$ | (0.04 |
) |
$ | (0.02 |
) |
||||
| Weighted-average shares outstanding - basic | 166,948,751 |
|
162,477,039 |
|
164,872,701 |
|
161,751,452 |
|
||||||||
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 and nine months ended September 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 and nine months ended September 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 September 30, 2022 | ||||
| Total cash costs, net of by-product credits | $ | 4,133 |
|
|
| Reconciliation to GAAP measure: | ||||
| Treatment and refining costs | $ | (95 |
) |
|
| Silver by-product credits | 217 |
|
||
| Write down of inventories to net realizable value | (75 |
) |
||
| Change in inventory (excluding depreciation, depletion and amortization) | 194 |
|
||
| Cost of metals sold | $ | 4,374 |
|
|
| Nine Months Ended September 30, 2022 | ||||
| Total cash costs, net of by-product credits | $ | 12,617 |
|
|
| Reconciliation to GAAP measure: | ||||
| Treatment and refining costs | $ | (307 |
) |
|
| Silver by-product credits | 865 |
|
||
| Write down of inventories to net realizable value | (75 |
) |
||
| Change in inventory (excluding depreciation, depletion and amortization) | 235 |
|
||
| Cost of metals sold | $ | 13,335 |
|
|
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 Company's plans to complete a maiden resource estimate for the Yoquivo gold-silver project; anticipated net operating margin from the Rodeo operation during the 12 months ending September 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 September 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; continued volatility in prices for gold and silver; results of mine testing activities at Velardeña; the Company's ability to recover VAT receivable in Mexico and the timing of such recovery; declines in general economic conditions; and changes in political conditions, in tax, royalty, environmental and other laws in the United States, Mexico or Argentina and other market conditions. 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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