Golden Minerals Reports Third Quarter 2018 Results
November 06 2018 - 6:45AM
Golden Minerals Company (“Golden Minerals”, “Golden” or the
“Company”) (NYSE American and TSX: AUMN) today announced financial
results and a business summary for the third quarter ended
September 30, 2018.
Third quarter Summary Financial
Results
- Net income of $1.6 million or $0.02 per share in the third
quarter 2018, compared to a net loss of $0.3 million or $0.00 per
share in the third quarter 2017.
- Revenue of $1.9 million and a net operating margin (oxide plant
lease revenue less lease costs) of $1.2 million related to the
lease of the Company’s oxide plant in the third quarter 2018,
compared to a $1.2 million net operating margin realized in the
third quarter 2017.
- Other operating income of $3.2 million included $3.0 million
related to the Celaya sale and $0.2 million related to the farm out
of Golden’s Zacatecas property. This compares to $1.0 million in
the year ago period related primarily to a refund of Mexican value
added tax payments and an equipment sale.
- Exploration expenses of $1.1 million compared to $1.0 million
in the year ago period, with the 2018 figure reflecting increased
exploration activities at projects in Mexico including Santa
Maria.
- Cash and cash equivalents balance of $5.0 million as of
September 30, 2018 compared to $3.3 million at year-end 2017.
- Debt balance of zero as of September 30, 2018.
Third Quarter Business
Summary
- Golden sold its remaining 20% interest in the Celaya property
to The Electrum Group LLC for (US) $3.0 million in August 2018.
Earlier in 2018, Golden also sold 20% of its interest in the
property (taking the Company’s percentage interest from 40% to 20%)
to The Electrum Group LLC for $1.0 million.
- Golden completed the first and positive Preliminary Economic
Assessment (“PEA”) for the El Quevar silver project in Argentina,
outlining a potential 6-year mining operation providing
approximately $80 million in life of mine (“LOM”) free cash flow
with LOM payable production of 29 million oz silver and a $45
million after-tax net present value (“NPV”) at a 5% discount
rate.
- The Company reported improved economics in a second PEA
completed for its Santa Maria silver and gold project in Mexico,
outlining a potential 4.2-year mining operation with $12.4 million
in LOM free cash flow, LOM payable production of 3.1 million oz
silver equivalent and a $10.6 million NPV at a 5% discount
rate.
- Subsequent to September 30, at the beginning of October 2018
Hecla Mining Company exercised its option to extend the lease of
Golden’s Velardeña oxide mill in Mexico for an additional two
years, thus extending the lease period through the end of
2020.
Financial Results
The Company reported revenue of approximately
$1.9 million in the third quarter 2018 related to the oxide plant
lease and costs of approximately $0.7 million related to the
services Golden provides under the terms of the lease, for a net
margin of $1.2 million. Other operating income of $3.2 million
included $3.0 million from the sale of Golden’s remaining interest
in the Celaya project to The Electrum Group LLC, as well as
pro-rated income from the farm-out of the Company’s Zacatecas
properties to Santacruz Silver. El Quevar project expense was $0.4
million in the third quarter 2018 and includes costs associated
with the recently-announced PEA as well as project evaluation and
property holding costs. Exploration expenses were $1.1 million in
the third quarter, reflecting increased exploration and project
evaluation activities at the Santa Maria as well as other projects
in Mexico. Exploration expenses also include property holding costs
and allocated administrative expenses for all Company exploration
projects other than El Quevar. Administrative expenses (including
all costs associated with being a public company, costs incurred in
support of our exploration properties and other administrative
expenses and professional fees) were $0.7 million in the third
quarter. Golden reported net income of $1.6 million or $0.02 per
share in the third quarter 2018 compared to a net loss of $0.3
million or $0.00 per share in the year ago period.
Twelve Month Financial
Outlook
The Company ended the third quarter 2018 with a
cash balance of $5.0 million and expects to receive approximately
$4.6 million in net operating margin from the lease of the oxide
plant during the 12 months ending September 30, 2019. Assuming no
sales of common stock under the Company’s At The Market Offering
Agreement or Lincoln Park Capital programs occur, the Company
projects it would end 2018 with a cash balance of $3.5 million and
end September 30, 2019 with a cash balance of $1.0 million, based
on the following forecasted expenditures during the next 12
months:
- Approximately $2.0 million on exploration activities and
property holding costs related to exploration properties located
primarily in Mexico, including project assessment and evaluation
costs related to Santa Maria and other properties;
- Approximately $1.5 million at the Velardeña Properties for care
and maintenance;
- Approximately $1.3 million at the El Quevar project to fund
ongoing exploration and evaluation activities, care and maintenance
and property holding costs; and
- Approximately $3.2 million on general and administrative costs
and $0.4 million on an increase in working capital.
Additional information regarding third quarter
2018 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.
Financial Statements
CONDENSED CONSOLIDATED BALANCE
SHEETS(US Dollars,
unaudited)
|
|
September
30, |
|
December
31, |
|
|
2018 |
|
|
2017 |
|
|
|
|
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
4,996 |
|
|
$ |
3,250 |
|
Short-term investments |
|
|
289 |
|
|
|
238 |
|
Lease receivables |
|
|
481 |
|
|
|
314 |
|
Inventories, net |
|
|
251 |
|
|
|
242 |
|
Value added tax receivable, net |
|
|
12 |
|
|
|
148 |
|
Prepaid expenses and other assets |
|
|
905 |
|
|
|
745 |
|
Total current assets |
|
|
6,934 |
|
|
|
4,937 |
|
Property, plant and equipment, net |
|
|
7,295 |
|
|
|
8,140 |
|
Total assets |
|
$ |
14,229 |
|
|
$ |
13,077 |
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Accounts payable and other accrued liabilities |
|
$ |
2,017 |
|
|
$ |
1,556 |
|
Deferred revenue, current |
|
|
293 |
|
|
|
293 |
|
Other current liabilities |
|
|
234 |
|
|
|
9 |
|
Total current liabilities |
|
|
2,544 |
|
|
|
1,858 |
|
Asset retirement and reclamation liabilities |
|
|
2,627 |
|
|
|
2,495 |
|
Deferred revenue, non-current |
|
|
381 |
|
|
|
600 |
|
Other long term liabilities |
|
|
18 |
|
|
|
43 |
|
Total liabilities |
|
|
5,570 |
|
|
|
4,996 |
|
|
|
|
|
|
|
|
Commitments and contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common stock, $.01 par value, 200,000,000 shares authorized;
95,620,796 and 91,929,709 shares issued and outstanding
respectively |
|
|
955 |
|
|
|
919 |
|
Additional paid in capital |
|
|
517,723 |
|
|
|
516,284 |
|
Accumulated deficit |
|
|
(510,019 |
) |
|
|
(509,082 |
) |
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(40 |
) |
Shareholders' equity |
|
|
8,659 |
|
|
|
8,081 |
|
Total liabilities and equity |
|
$ |
14,229 |
|
|
$ |
13,077 |
|
|
|
|
|
|
|
|
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS(US dollars,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended |
|
Nine Months
Ended |
|
|
|
September
30, |
|
September
30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
(in thousands except per share data) |
|
(in thousands, except per share data) |
|
Revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxide plant
lease |
|
$ |
1,900 |
|
|
$ |
1,771 |
|
|
$ |
5,267 |
|
|
$ |
5,107 |
|
|
Total revenue |
|
|
1,900 |
|
|
|
1,771 |
|
|
|
5,267 |
|
|
|
5,107 |
|
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxide plant lease costs |
|
|
(657 |
) |
|
|
(619 |
) |
|
|
(1,685 |
) |
|
|
(1,704 |
) |
|
Exploration expense |
|
|
(1,077 |
) |
|
|
(977 |
) |
|
|
(3,017 |
) |
|
|
(1,968 |
) |
|
El Quevar project expense |
|
|
(364 |
) |
|
|
(183 |
) |
|
|
(917 |
) |
|
|
(524 |
) |
|
Velardeña shutdown and care and maintenance costs |
|
|
(428 |
) |
|
|
(379 |
) |
|
|
(1,409 |
) |
|
|
(1,098 |
) |
|
Administrative expense |
|
|
(673 |
) |
|
|
(694 |
) |
|
|
(2,556 |
) |
|
|
(2,592 |
) |
|
Stock based compensation |
|
|
139 |
|
|
|
7 |
|
|
|
(111 |
) |
|
|
(300 |
) |
|
Reclamation expense |
|
|
(53 |
) |
|
|
(49 |
) |
|
|
(156 |
) |
|
|
(146 |
) |
|
Other operating income, net |
|
|
3,188 |
|
|
|
951 |
|
|
|
4,638 |
|
|
|
1,813 |
|
|
Depreciation and amortization |
|
|
(337 |
) |
|
|
(138 |
) |
|
|
(897 |
) |
|
|
(456 |
) |
|
Total costs and expenses |
|
|
(262 |
) |
|
|
(2,081 |
) |
|
|
(6,110 |
) |
|
|
(6,975 |
) |
|
Income (loss) from operations |
|
|
1,638 |
|
|
|
(310 |
) |
|
|
(843 |
) |
|
|
(1,868 |
) |
|
Other income and (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest and other (expense) income, net |
|
|
(59 |
) |
|
|
15 |
|
|
|
54 |
|
|
|
37 |
|
|
Gain (loss) on foreign currency |
|
|
6 |
|
|
|
(23 |
) |
|
|
(50 |
) |
|
|
(20 |
) |
|
Total other income |
|
|
(53 |
) |
|
|
(8 |
) |
|
|
4 |
|
|
|
17 |
|
|
Income (loss) from operations before income taxes |
|
|
1,585 |
|
|
|
(318 |
) |
|
|
(839 |
) |
|
|
(1,851 |
) |
|
Income tax |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Net income (loss) |
|
$ |
1,585 |
|
|
$ |
(318 |
) |
|
$ |
(839 |
) |
|
$ |
(1,851 |
) |
|
Comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities |
|
|
— |
|
|
|
11 |
|
|
|
— |
|
|
|
(92 |
) |
|
Comprehensive income (loss), net of tax: |
|
$ |
1,585 |
|
|
$ |
(307 |
) |
|
$ |
(839 |
) |
|
$ |
(1,943 |
) |
|
Net income (loss) per common share — basic |
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss |
|
$ |
0.02 |
|
|
$ |
- |
|
|
$ |
(0.01 |
) |
|
$ |
(0.02 |
) |
|
Weighted average Common Stock outstanding - basic
(1) |
|
|
95,271,194 |
|
|
|
91,097,279 |
|
|
|
93,572,608 |
|
|
|
90,028,480 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Potentially dilutive shares have not been included because to
do so would be anti-dilutive.
About Golden Minerals
Golden Minerals is a Delaware corporation based
in Golden, Colorado. The Company is primarily focused on advancing
its El Quevar property in Argentina and in acquiring and advancing
mining properties in Mexico with emphasis on areas near its
Velardeña processing plants.
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 relating to the anticipated net
operating margin from the Velardeña oxide plant lease; assumptions
regarding future activity under the Company’s ATM and Lincoln Park
Capital programs; potential future operations at Santa Maria and El
Quevar; and the anticipated cash balance based on forecasted
expenditures on care and maintenance at the Velardeña Properties
and El Quevar project, exploration and evaluation expenditures at
the El Quevar Project, property holding costs at the El Quevar
project, general and administrative costs, working capital
expenditures, and expenditures on exploration activities and
holding costs related to properties in Mexico, including
evaluations and assessment costs at Santa Maria and other
properties. These statements are subject to risks and
uncertainties, including: lower than anticipated revenue from
the oxide plant lease as a result of delays or problems at the
third party’s mine or the oxide plant; earlier than expected
termination of the lease or other causes; the reasonability of the
economic assumptions at the basis of the results of the El Quevar
PEA and the Santa Maria PEA; changes in interpretations of
geological, geostatistical, metallurgical, mining or processing
information and interpretations of the information resulting from
future exploration, analysis or mining and processing experience;
new information from drilling programs or other exploration or
analysis; unexpected variations in mineral grades, types and
metallurgy; fluctuations in silver and gold metal prices; failure
of mined material or veins mined to meet expectations; increases in
costs and declines in general economic conditions; and changes in
political conditions, in tax, royalty, environmental and other laws
in Mexico and Argentina, 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 SEC by Golden Minerals,
including the Company’s Annual Report on Form 10-K for the year
ended December 31, 2017.
For additional information please visit http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler, Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
SOURCE: Golden Minerals Company
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