COVID-19 Pandemic
On January 30, 2020, the World Health Organization (“WHO”) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (“COVID-19”) and the risks to the international community as the virus spreads globally beyond its point of origin. In March 2020, the WHO classified the COVID-19 outbreak as a pandemic based on the rapid increase in global exposure. In response to the pandemic, many jurisdictions, including the United States and Mexico, instituted restrictions on travel, public gatherings and certain business operations.
Currently the mining industry is listed as an essential business in the State of Nevada and we continue to operate our mining unit while utilizing appropriate safety measures. On March 31, 2020, the Mexican government issued a national health emergency with an immediate suspension order for all “non-essential” public and private sector business (which included mining) to mitigate the spread and transmission of the COVID-19. As a result, we suspended our Mexico operations and production on April 1, 2020. The Mexican government then designated mining as an essential business in mid-May 2020 and as a result we were given approval to restart our operations on May 27, 2020.
In an effort to mitigate the spread of COVID-19 and protect the health and safety of our employees, contractors, and communities, we have taken precautionary measures including specialized training, social distancing, screening workers before they enter facilities, a work from home mandate where possible, and close monitoring of national and regional COVID-19 impacts and governmental guidelines. Since our non-mining workforce is able to work remotely using various technology tools, we are able to maintain our operations and internal controls over financial reporting and disclosures.
We are not able to estimate the long-term impact of COVID-19 on our business, financial condition, results of operations, and liquidity for fiscal year 2020. However, we believe we have sufficient liquidity available from operating cash flow and cash on hand going forward.
Oaxaca Mining Unit Production and Sales
Oaxaca Mining Unit Production
Gold and silver production for the second quarter of 2020 totaled 2,441 ounces and 185,330 ounces, respectively, compared to 7,881 and 466,512 ounces over the same period in 2019. The decrease in gold and silver production was primarily the result of temporary suspension of operations for COVID-19 mitigation as well as lower precious metal grades.
For the first half of 2020, we produced 8,891 and 587,872 ounces of gold and silver, respectively, as compared to 14,419 and 831,165 ounces of gold and silver, respectively, over the same period in 2019. The decrease is due to the suspension of operations for COVID-19. As of the date of the issuance of these unaudited Condensed Consolidated Financial Statements and Management’s Discussion and Analysis, we have fully reengaged our workforce and returned to our normal mining and milling rates.