Golden Minerals Company (“Golden Minerals,” “Golden” or the
“Company”) (NYSE-A: AUMN and TSX: AUMN) has today released
financial results and a business summary for the quarter ending
September 30, 2023. (All figures are in approximate U.S.
dollars.)
Third Quarter Business Summary and Subsequent Events
- On November 8, 2023, the Company closed a public offering of an
aggregate of 6 million shares of the Company’s common stock and
related warrants, at a purchase price of $0.70 per share (the
“November 2023 Offering”). Gross proceeds from the offering were
approximately $4.2 million, prior to deducting placement agent’s
fees and other offering expenses payable by the Company. Full
details of the November 2023 Offering may be found in the
Prospectus filed with the Securities and Exchange Commission on
November 8, 2023, a copy of which is available on the Company’s
website at
https://www.goldenminerals.com/financials-filings/sec-filings/.
- The Company is engaged in settlement negotiations regarding the
dispute with Unifin Financiera, S.A.B. de C.V. (“Unifin”). Although
no definitive settlement agreement has yet been executed, an
accrued liability of $0.25 million has been recorded as of
September 30, 2023. Given that the settlement proposals have not
resulted in a written agreement, we cannot give any assurances that
the settlement will be effected upon the terms under discussion or
at all.
- The Company continued with activities in preparation for
restarting production at the Velardeña Properties. Preparations
include permitting, equipment readiness, arrangements with union
staff, contract miners, plant operators and support personnel. The
Velardeña mines last operated in November 2015.
- The Company completed and filed an updated Technical Report
(“TR”), completed as a Preliminary Economic Assessment (“PEA”), for
its Velardeña Properties (Durango State, Mexico). The updated PEA
estimates an after-tax net present value (“NPV”) of $87.6 million,
using a discount rate of 8%, with a mine life of 10.5 years. The TR
is prepared as an update of a previous PEA dated March 1, 2022 and
incorporates additional information developed by the Company since
the 2022 report, including updated pricing and concentrate sales
terms, and the exclusion of a bio-oxidation plant that was formerly
contemplated.
- The Company concluded mining activities at the Rodeo mine in
June 2023 as previously disclosed. During the third quarter of
2023, the Company continued to process material which had been
stockpiled from the Rodeo mine. The processing of the stockpiled
material concluded in August when the grade of the stockpiles
became uneconomic. The last pour of doré occurred in
September.
Third Quarter Financial Summary
- Revenue was $2.5 million in the third quarter 2023 and included
sales of the Rodeo mine’s metals and slag material, as well as
sales of Velardeña concentrates from previously stockpiled
material. Revenue was $5.3 million in the third quarter 2022 and
was comprised solely of Rodeo’s sale of metals.
- Net operating margin (defined as revenue from the sale of
metals less cost of metals sold) was negative $0.8 million in the
third quarter 2023. Net operating margin was positive $0.9 million
in the third quarter 2022 which related solely to the Rodeo mine’s
sale of metals. The lower net operating margin in the third quarter
2023 compared to the third quarter of 2022 was due mainly to the
processing of the stockpiled material in the third quarter 2023
which had lower grades than the mined material processed in the
third quarter of 2022.
- Cash and equivalents balance as of September 30, 2023 was $1.6
million, compared to $4.0 million on December 31, 2022.
- Zero debt as of September 30, 2023, unchanged from December 31,
2022.
- Net loss was $3.2 million or $0.38 per share in the third
quarter 2023, compared to a net loss of $2.7 million or $0.40 per
share in the third quarter 2022.
Cash Inflows and Expenditures
Cash expenditures during the nine months ended September 30,
2023 totaled $8.6 million and included:
- $2.9 million in exploration expenditures;
- $0.9 million in care and maintenance costs at the Velardeña
Properties;
- $0.4 million in care and maintenance costs at the El Quevar
project, net of reimbursements from Barrick Gold Corporation
(“Barrick”) pursuant to the Earn-In Agreement between the Company
and Barrick;
- $3.7 million in general and administrative expenses; and
- $0.7 million of negative net operating margin from Rodeo
operations (which includes Mexico G&A).
The above expenditures were offset by cash inflows of $6.2
million from the following:
- $1.2 million of net operating margin from sales of Velardeña
concentrates;
- $1.8 million, net of fees from the Company’s ATM Program;
- $1.9 million, net of fees from the previously reported June
2023 registered direct offering and concurrent private placement of
the Company’s common stock; and
- $1.3 million from changes in working capital (mainly due to a
decrease in inventory associated with the end of operations at
Rodeo).
Capital Resources and 12-Month Financial Outlook
At September 30, 2023, the Company had current assets of
approximately $5.9 million, including cash and cash equivalents of
approximately $1.6 million. On the same date, it had accounts
payable and other current liabilities of approximately $5.6
million. Because the Company has ceased mining at the Rodeo mine,
its only near-term opportunity to generate cash flow from mining to
support continued operations is the Velardeña mine.
On November 8, 2023, the Company closed the November 2023
Offering which raised gross proceeds of $4.2 million and net
proceeds of approximately $3.8 million after expenses. These funds
were anticipated in the Company’s forecast. The Company’s forecast
for the twelve-month period ending September 30, 2024 also projects
the receipt of additional capital inflows of $3.0 to $4.5 million.
In order to commence and maintain production at Velardeña, the
Company expects to spend approximately $3.0 to $3.5 over the first
five months of production primarily for additional underground
development, which is included in the capital forecast discussed
above. The actual amount of additional capital required during the
twelve-month period ending September 30, 2024 may vary
significantly from the amounts specified above and will depend on a
number of factors, including variations in the anticipated
administrative costs, costs to restart Velardeña, costs at El
Quevar, and costs for continued exploration, project assessment,
and advancement of its other exploration properties. Assuming that
the Company is successful in restarting production and that it
meets its production objectives at the Velardeña Properties, cash
flow from Velardeña is expected to be positive by the end of the
second quarter of 2024. The additional capital required may take
the form of non-core asset sales (such as the one described below),
debt financing, production-based financing (such as streaming or
royalty financing), collection of outstanding VAT receivable, or
otherwise. After the November 2023 Offering, the Company’s
available shares authorized but not issued or outstanding is
approximately 2.2 million shares. Should the Company desire to make
future stock offerings of more than 2.2 million shares, the number
of authorized shares will need to be increased which will require
shareholder approval.
With regards to the sale of non-core assets, Golden executed a
non-binding letter of intent for the sale of its Santa Maria
property for a total consideration consisting of (i) initial cash
proceeds of $1.5 million (plus an additional $0.24 million in VAT
payment that the Company can retain) and (2) a 1.5% net smelter
return royalty on the Santa Maria concession up to a cap of $1.0
million (which may be purchased by the potential buyer from Golden
for $0.5 million at any time prior to the commencement of
commercial production on the Santa Maria property). If that
transaction is consummated, the funds would likely be received in
November 2023 or later.
Golden Minerals has also held discussions with various financing
parties with regard to equity and/or debt financing as well as
streaming or royalty arrangements involving future production at
Velardeña.
Quarterly Report on Form 10-Q
The Company’s consolidated financial statements and management’s
discussion and analysis, as well as other important disclosures,
may be found in the Company’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2023. This Form 10-Q is available on
the Company’s website at Golden Minerals Company - SEC Filings. It
has also been filed with the U.S. Securities and Exchange
Commission on EDGAR at www.sec.gov/edgar and with the Canadian
securities regulatory authorities on SEDAR at www.sedar.com.
About Golden Minerals
Golden Minerals is a gold and silver producer based in Golden,
Colorado. The Company is primarily focused on advancing its
Velardeña and Yoquivo 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.
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, such as
statements regarding (i) the Velardeña Properties, including plans
and preparation for restarting production at the properties,
estimated NPV and mine life, cash flow from the properties,
additional capital requirements to restart production on the
properties in the form of non-core asset sales, debt financing,
production-based financing and/or collection of outstanding VAT
receivable, expected expenditures over the first five months of
production on the properties for additional underground development
and discussions with various financing parties with regard to
equity and/or debt financing as well as streaming or royalty
arrangements involving future production at the properties; (ii)
settlement of the Unifin dispute; (iii) projected receipt of
additional capital during the twelve-month period ending September
30, 2024; (iv) increase in the authorized shares of the Company
should the Company decide to make a future stock offering; and (v)
the potential sale of the Company’s Santa Maria property. These
statements are subject to risks and uncertainties, including
increases in costs and declines in general economic conditions;
changes in current payable terms for gold-bearing pyrite
concentrates; changes in political conditions, in tax, royalty,
environmental and other laws in Mexico and other market conditions;
unanticipated variations in grade; challenges associated with our
proposed mining plans, including difficulties in controlling grade
dilution and interruptions in mining; variations in the anticipated
administrative costs, costs to restart Velardeña, costs at El
Quevar, and costs for continued exploration, project assessment,
and advancement of the Company’s other exploration properties, or
an adverse result in the pending lawsuit with Unifin Financiera,
S.A.B. de C.V. 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, 2022.
Follow us at www.linkedin.com/company/golden-minerals-company/
and https://twitter.com/Golden_Minerals.
For additional information, please visit
http://www.goldenminerals.com/ or contact:
Golden Minerals Company Karen Winkler, Director of Investor
Relations (303) 839-5060
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version on businesswire.com: https://www.businesswire.com/news/home/20231110526239/en/
Golden Minerals Company Karen Winkler, Director of Investor
Relations (303) 839-5060
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