GOLDEN, Colo., Aug. 6, 2015 /CNW/ -- Golden Minerals
Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX:
AUM) today announced financial results for the quarter ended
June 30, 2015.
Summary
- Net loss of (US)$3.9 million in
the second quarter 2015, compared to losses of $5.0 million in the second quarter 2014 and
$3.4 million in the first quarter
2015
- Generated approximately 125,000 payable silver equivalent
ounces (AgEq oz) and sold approximately 133,000 silver equivalent
ounces, compared to 126,000 payable AgEq oz generated and 139,000
AgEq oz sold in the first quarter 2015
- Metals grades similar to those in the first quarter: 169
grams per tonne (gpt) silver and 2.8 gpt gold, as compared to 178
gpt silver and 2.7 gpt gold in the first quarter 2015
- Reported cash costs, net of by-product credits, per payable
ounce of silver of $25.90 compared to
$22.53 in the first quarter 2015 due
to some temporary operational difficulties (See "Non-GAAP
Financial Measures" below)
- Signed a $4-5 million annual
lease agreement with Hecla Mining Company for Hecla to process mineral through Golden
Minerals' presently-idled oxide plant at Velardena
- Discovered new gold and silver mineralization in Guanajuato, Mexico in a 2,000-meter,
three-hole diamond drill program at the Company's Celaya property
- Acquired the Rodeo and Rodeo 2 claims located 80 kilometers
west of Velardena, where previous
work by other companies has identified a gold-bearing epithermal
system exposed at surface with potential to provide oxide material
to the Company's Velardena
mill
Financial Results
The Company reduced its net loss to $3.9
million in the second quarter 2015 from $5.0 million in the second quarter 2014.
The difference is primarily attributable to revenue of
$2.0 million recorded in the current
quarter compared to no revenue in the second quarter 2014; the
absence of Velardena care and
maintenance expenses in the current quarter as opposed to
$1.2 million in the 2014 period;
$0.4 million lower exploration
expenses, $0.3 million other
operating income related to non-strategic property and equipment
sales, and $0.2 million lower general
and administrative expenses in the 2015 quarter. Partly
offsetting these items were $2.8
million cost of metals sold in the current period compared
to none in the 2014 period and $0.4
million higher depreciation and amortization-related
expenses in the current period.
The Company's cash and cash equivalents balance at June 30, 2015 was $3.3
million compared to $8.6
million on December 31,
2014. The primary uses of cash during the first half of 2015
were as follows:
- $1.5 million negative operating
margin (defined as revenues less costs of sales) at the Velardena
Properties
- $2.2 million in exploration
expenditures
- $0.7 million in maintenance
and property holding costs at the El Quevar project
- $2.3 million in general and
administrative expenses, offset in part by a reduction in working
capital and other items of $1.4
million relating to proceeds from sales of non-strategic
property and equipment, collections of value added tax receivables,
decreases in product inventories and an increase in accounts
payable
Velardena Properties Update
Velardena's second quarter 2015
performance was generally in line with the first quarter 2015 but
lower than previously-issued guidance. Average grades of
plant feed in the second quarter 2015 were 169 gpt silver and 2.8
gpt gold as compared to 178 gpt silver and 2.7 gpt gold in the
first quarter 2015, below expectations for improving grades.
Second quarter payable metals generated were approximately 125,000
payable AgEq ounces compared to 126,000 in the first quarter, and
were below previous guidance of 200,000 to 250,000 payable AgEq
oz. (Note: silver equivalent ounces include silver and
gold but exclude lead and zinc, and are calculated at a ratio of 70
silver ounces to one gold ounce.) Second quarter cash costs
per payable silver ounce, net of by-product credits were
$25.90 compared to $22.53 in the first quarter and previous guidance
of $15 to $20. The higher cash
costs compared to prior guidance were attributable primarily to
lower AgEq ounces than planned, as cash spending in the quarter was
as expected.
The primary contributor to the second quarter's lower payable
metals and higher cash costs was the processing of less material
through the mill than anticipated. Although the mill
continued to ramp up during the second quarter, running as high as
370 tonnes per day (tpd) and averaging 280 tpd on the days it
operated, a delay in hiring new and replacement miners during labor
union negotiations resulted in less material supplied to the mill,
and the mill did not operate for 19 days during the
quarter.
Payable metals, recoveries and unit costs were negatively
impacted during the second quarter by a lower output of
gold-bearing pyrite concentrates. Lower than projected gold
recovery in the pyrite circuit of the plant generated pyrite
concentrates that were uneconomic to sell at current metals
prices. Pyrite concentrates were stockpiled initially during
the quarter until the pyrite circuit was shut down pending further
review of technical alternatives to improve the gold grades in the
concentrates.
For the remainder of 2015 the Company intends to focus primarily
on increasing mining from the San Mateo, Roca Negra and Terneras veins. The Company
also intends to re-open the Chicago mine to use for blending purposes to
improve the lead content of the plant feed, which in turn should
have a positive impact on silver, gold and lead recoveries.
The Company expects plant feed material grades to gradually
increase through the end of 2015 as new stopes in the mine are
developed and access to the Terneras vein increases, with less
reliance on material from access drives.
Golden Minerals expects output of approximately 400,000 payable
AgEq oz in the second half of 2015, with cash costs between
$15.00 and $17.00 per payable silver
ounce, net of by-product credits. Assuming lower forecasted
metals prices of $16.00 per ounce
silver and $1,125 per ounce gold, the
Company expects Velardena to
generate near-breakeven operating margin for the second half of
2015.
The mill leasing agreement signed on July
15, 2015 with Hecla Mining Company's wholly owned Mexican
subsidiary to process material at Golden Minerals' currently idled
Velardena oxide mill should
provide nominal monthly payments to the Company starting
July 1, 2015 as well as monthly
payments of approximately $400,000,
or nearly $5 million in net cash flow
annually, once Hecla reaches its
intended capacity of approximately 400 tonnes per day (tpd), which
is anticipated to be around January 1,
2016.
Exploration Update
The Company has completed a 2,000-meter, three-hole diamond
drill program at the Celaya
property located 45 kilometers southeast of and on trend with the
historic Guanajuato District in
Mexico. Management believes it has succeeded in identifying
the first known epithermal gold and silver mineralization beneath a
portion of the widespread clay-silica alteration on the claims
comprising the Celaya
project. Highest grade intercepts include 0.4 meters of 758
gpt silver in drill hole CE15-03 and 1.1 meters of 7.4 g/t gold and
393 gpt silver in drill hole CE15-05. All drill results are
posted on the Company's website.
Exploration work at the Santa
Maria silver mine in Chihuahua,
Mexico continues, including collecting bulk samples of the
vein for metallurgical testing and processing. The Company
has the right to acquire the Santa
Maria mine under an option agreement.
During the second quarter, the Company acquired the Rodeo and
Rodeo 2 claims comprising 1,866 hectares located 80 kilometers west
of Velardena, where previous work
by other companies has identified a gold-bearing epithermal system
exposed at surface. The Company plans to conduct a drilling
program on these claims once permits are received. If
exploration efforts are successful, material from these properties
could be trucked to the Velardena
oxide plant for processing. A 2010 Canada Instrument 43-101
technical report filed by Camino Minerals Corporation documents
drill results including 27 meters of 5.98 gpt gold on this
property.
The Los Azules property was returned to its owners in the second
quarter 2015, as its grades and tonnage as outlined in the
Company's May 2015 Canada Instrument
43-101 technical report did not meet company objectives.
Financial Outlook
At June 30, 2015, the Company's
cash and cash equivalents balance was $3.3
million. Assuming metals prices of $16.00 per ounce silver and $1,125 per ounce gold, Golden Minerals expects
that the Velardena Properties will generate near breakeven
operating margin through the remainder of 2015. The recently
executed lease agreement with Hecla should contribute approximately
$0.2 million in net cash flow during
the second half of 2015. During 2016, the Hecla lease should generate between
$4.0 and $5.0 million of net cash
flow. With the cash balance at June
30, 2015, the assumptions described below, and in the
absence of additional funding from outside sources, the Company
expects to end 2015 with a near zero cash balance. This
projected cash balance is not sufficient to provide adequate
reserves in the event of decreasing metals prices or interruptions
of, or less favorable results than planned from, mining and
activity at the Velardena Properties or to adequately pursue
further exploration of the Company's Mexican properties, and
therefore requires the Company to seek additional external funding
from equity or debt.
With the June 30, 2015 cash
balance of $3.3 million and a near
breakeven operating margin from Velardena for the remainder of 2015, assuming
metals prices of $16.00 per ounce
silver and $1,125 per ounce gold,
Golden expects to spend
approximately $3.2 million during the
remainder of 2015 on the following items:
- $0.3 million at the El Quevar to
fund ongoing maintenance activities and property holding costs
- $1.0 million on exploration
activities and property holding costs related to the Company's
portfolio of exploration properties located primarily in
Mexico
- $1.9 million, comprised of
general and administrative costs of $2.0
million offset by $0.1 million
in decreased working capital primarily related to collection of
value added tax receivables
Additional information regarding second quarter 2015 financial
results may be found in the Company's 10-Q Quarterly Report which
is available on the Golden Minerals website at
www.goldenminerals.com.
About Golden Minerals
Golden Minerals is a Delaware
corporation based in Golden,
Colorado. The Company is primarily focused on mining its
Velardena Properties and the exploration of properties in
Mexico.
Non-GAAP Financial Measures
Cash costs per payable silver ounce, net of by-product credits
is a non-GAAP financial measure calculated by the Company as set
forth below, and may not be comparable to similar measures reported
by other companies.
Cash costs per payable silver ounce, net of by-product credits,
include all direct and indirect costs associated with the physical
activities that would generate concentrate 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. 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
Velardena Properties. By-product credits include revenues
from gold, lead and zinc contained in the products sold to
customers during the period. Cash costs, after by-product
credits, are divided by the number of payable silver ounces
generated by the plant for the period to arrive at cash costs,
after by-product credits, per payable ounce of silver. Cost
of sales is the most comparable financial measure, calculated in
accordance with GAAP, to cash costs. As compared to cash
costs, cost of sales includes adjustments for changes in inventory
and excludes net revenue from by-products and third-party related
treatment, refining and transportation costs, which are reported as
part of revenue in accordance with GAAP.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act and applicable Canadian securities legislation,
including statements regarding including the Company's planned
expenditures during the second half of 2015 and anticipated
cash and cash equivalents balance at year-end 2015; assumed silver
and gold prices; anticipated payable metal outputs and cash costs
per payable silver equivalent ounce, net of by-product credits;
planned mining focus for the remainder of 2015 including the
reopening of the Chicago mine;
continuing technical work to improve gold-bearing pyrite
concentrates; anticipated improvements in the grade of mined
material processed through the plant, silver, gold and lead
recoveries, increases in amounts of material supplied to the plant;
net cash flow expected to be received in the remainder of 2015 and
in 2016 from the lease by Hecla's
subsidiary of the Velardena oxide
mill; planned exploration activities and significance of drill
results from the Company's exploration and that of other companies;
and anticipated external financing activities. These
statements are subject to risks and uncertainties, including: lower
than assumed silver and gold prices, higher than anticipated costs
of mining and processing; lower than anticipated grades in mined
material; delays or problems in mining including a continuing
inability of the mine to provide sufficient material for the plant
to run at sufficient capacity to make the anticipated amounts of
saleable metals; delays or problems in processing or the
anticipated ramp-up in making saleable concentrates at the
Velardena Properties; variations in material grade and
metallurgical characteristics of processed material; inability to
reduce dilution and otherwise improve grades of mined material and
plant feed; delays or failures in receiving government approvals or
permits or suspensions of existing approvals and permits; failure
to achieve anticipated metal recoveries including failures
resulting from not re-opening the Chicago mine or from not achieving the
improved recoveries expected from blending Chicago material; failure to achieve
anticipated mining or processing results including expected
quantities of anticipated saleable products; inability to develop a
way to produce gold-bearing concentrates that are economic;
failures of new mine plan and stope development to meet
expectations; lower than anticipated net cash flow from the
Hecla lease due to problems at
Hecla's mine or the Velardena oxide mill resulting in less than
anticipated production or due to delay in processing or
cancellation of the lease by Hecla
due to inability to obtain required permits or for other
reasons; changes in interpretations of geological, geostatistical,
metallurgical, mining or processing information and interpretations
of the information resulting from future mining and processing
experience; reliability of metallurgical testing results and
changes in interpretation based on processing results; technical,
permitting, mining, metallurgical, recovery or processing issues;
problems that delay or reduce underground mine and stope
construction; operational changes or problems; failure of mined
material to meet expectations; failure of veins mined to meet
expectations; increases in costs and declines in general economic
conditions; unfavorable results of exploration at Celaya, Santa
Maria, Rodeo or other exploration projects, including
failure to replicate or improve on the previous exploration results
of other companies and whether initial favorable results at
Celaya are supported by further
exploration; delays in planned exploration resulting from
permitting delays or insufficient funds; continued declines or only
minor improvements in gold, silver, zinc and lead prices; inability
to raise external financing on acceptable terms or at all; and
changes in political conditions, in tax, royalty, environmental and
other laws in Mexico, and
financial 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 Securities Exchange Commission by
Golden Minerals, including the Company's Annual Report on Form 10-K
for the year ended December 31,
2014.
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
GOLDEN MINERALS
COMPANY
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Expressed in
United States dollars)
|
(Unaudited)
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2015
|
|
2014
|
|
|
|
(in thousands,
except share data)
|
Assets
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$ 3,291
|
|
$
8,579
|
|
Short-term
investments
|
162
|
|
-
|
|
Trade
receivables
|
43
|
|
-
|
|
Inventories
|
1,086
|
|
1,497
|
|
Value added tax
receivable, net
|
654
|
|
1,316
|
|
Prepaid expenses and
other assets
|
703
|
|
835
|
|
|
Total current
assets
|
5,939
|
|
12,227
|
Property, plant and
equipment, net
|
26,208
|
|
29,031
|
|
|
Total
assets
|
$ 32,147
|
|
$
41,258
|
Liabilities and
Equity
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
$ 1,757
|
|
$
1,639
|
|
Other current
liabilities
|
1,413
|
|
2,551
|
|
|
Total current
liabilities
|
3,170
|
|
4,190
|
|
Asset retirement
obligation
|
2,478
|
|
2,685
|
|
Warrant
liability
|
687
|
|
1,554
|
Other long term
liabilities
|
90
|
|
95
|
|
|
Total
liabilities
|
6,425
|
|
8,524
|
|
|
|
|
|
|
Equity
|
|
|
|
|
Common stock, $.01
par value, 100,000,000 shares
authorized; 53,162,833 shares issued and outstanding for both
periods
|
|
|
|
|
532
|
|
532
|
|
Additional paid in
capital
|
484,503
|
|
484,197
|
|
Accumulated
deficit
|
(459,276)
|
|
(451,995)
|
|
Accumulated other
comprehensive loss
|
(37)
|
|
-
|
|
|
Shareholder's
equity
|
25,722
|
|
32,734
|
|
|
Total liabilities and
equity
|
$ 32,147
|
|
$
41,258
|
GOLDEN MINERALS
COMPANY
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
|
(Expressed in
United States dollars) (Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Six Months
Ended
|
|
|
|
June
30,
|
|
June
30,
|
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
(in thousands,
except share data)
|
Revenue:
|
|
|
|
|
|
|
|
|
Sale of
metals
|
$ 1,961
|
|
$
-
|
|
$ 4,298
|
|
$
-
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Costs applicable to
sale of metals (exclusive of
depreciation shown below)
|
|
|
|
|
|
|
|
|
(2,775)
|
|
-
|
|
(5,787)
|
|
-
|
|
Exploration
expense
|
(1,267)
|
|
(1,653)
|
|
(2,236)
|
|
(3,253)
|
|
El Quevar project
expense
|
(405)
|
|
(421)
|
|
(811)
|
|
(755)
|
|
Velardena project
expense
|
-
|
|
-
|
|
(119)
|
|
-
|
|
Velardena shutdown
and care & maintenance costs
|
-
|
|
(1,208)
|
|
-
|
|
(2,457)
|
|
Administrative
expense
|
(1,000)
|
|
(1,150)
|
|
(2,328)
|
|
(2,805)
|
|
Stock based
compensation
|
(94)
|
|
(257)
|
|
(273)
|
|
(587)
|
|
Reclamation and
accretion expense
|
(48)
|
|
(49)
|
|
(158)
|
|
(98)
|
|
Other operating
income, net
|
294
|
|
2
|
|
470
|
|
4
|
|
Depreciation,
depletion and amortization
|
(1,175)
|
|
(778)
|
|
(2,534)
|
|
(1,624)
|
|
|
Total costs and
expenses
|
(6,470)
|
|
(5,514)
|
|
(13,776)
|
|
(11,575)
|
|
Loss from
operations
|
(4,509)
|
|
(5,514)
|
|
(9,478)
|
|
(11,575)
|
Other income and
(expense):
|
|
|
|
|
|
|
|
|
Interest and other
income, net
|
467
|
|
487
|
|
1,383
|
|
881
|
|
Warrant derivative
gain
|
218
|
|
-
|
|
868
|
|
-
|
|
(Loss) gain on
foreign currency
|
(26)
|
|
(16)
|
|
(54)
|
|
(7)
|
|
|
Total other
income
|
659
|
|
471
|
|
2,197
|
|
874
|
|
Loss from operations
before income taxes
|
(3,850)
|
|
(5,043)
|
|
(7,281)
|
|
(10,701)
|
|
Income tax
benefit
|
-
|
|
-
|
|
-
|
|
-
|
|
Net loss
|
$ (3,850)
|
|
$ (5,043)
|
|
$ (7,281)
|
|
$ (10,701)
|
Comprehensive
loss, net of tax:
|
|
|
|
|
|
|
|
|
Unrealized gain
(loss) on securities
|
43
|
|
-
|
|
(37)
|
|
-
|
|
Comprehensive
loss
|
$ (3,807)
|
|
$ (5,043)
|
|
$ (7,318)
|
|
$ (10,701)
|
Net loss per
common share – basic
|
|
|
|
|
|
|
|
|
Loss
|
$
(0.07)
|
|
$
(0.12)
|
|
$
(0.14)
|
|
$
(0.25)
|
Weighted average
common stock outstanding - basic (1)
|
52,688,552
|
|
42,918,426
|
|
52,688,552
|
|
42,906,090
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Potentially dilutive shares have not been included because to do so
would be anti-dilutive.
|
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SOURCE Golden Minerals Company