GOLDEN, Colo., Nov. 6, 2013 /PRNewswire/ -- Golden Minerals
Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX:
AUM) announces results for the quarter ending September 30, 2013.
(Logo:
http://photos.prnewswire.com/prnh/20120803/LA52082LOGO)
Financial Results
For the third quarter 2013, Golden Minerals recorded revenue of
$0.5 million and costs of metals sold
of $0.5 million from the Company's
Velardena Operations in Mexico.
The Company suspended production at the Velardena property on June 19, 2013 and third quarter 2013 revenue
represents inventory on hand as of the suspension date that was
sold during the quarter. In the third quarter 2012, the
Company recorded revenue of $7.1
million, cost of metals sold of $8.6
million and a negative gross margin of $1.5 million. The decrease in year over
year revenue is due to the suspension of production in June, 2013.
The Company recorded a net loss of $6.2 million in the third quarter 2013 as
compared to a net loss of $63.3
million in the third quarter 2012. The 2012 net loss
included a non-cash $57.2 million
reduction in goodwill related to lower forecasted metals prices and
changed operating plan assumptions for the Velardena property. Loss from operations
in the third quarter 2013 was $6.4
million compared to $66.5
million in the third quarter 2012, with the difference
attributable primarily to the 2012 reduction in goodwill and to
lower costs of metals sold in 2013.
The Company's cash and short-term investments balance on
September 30, 2013 was $23.8 million as compared to $44.6 million on December
31, 2012. The decrease during the nine month period is
due primarily to $6.7 million in
operating losses at the Velardena Operations; $4.9 million in Velardena Operations capital
and development expenditures; $4.6
million in suspension-related activities at the Velardena
Operations, including care and maintenance costs; $3.4 million in exploration expenditures;
$4.6 million in general and
administrative expenses; and $2.2 million in El Quevar project expense;
offset in part by net proceeds of $4.0 million from the sale of non-strategic
exploration property interests and a decrease in working capital of
$1.6 million primarily related to a
reduction in inventories and receivables at the Velardena
Operations.
Velardena Operations
On June 19, 2013 the Company
suspended production at its Velardena Operations in Mexico. Earlier in the year the Company
projected that the Velardena Operations would achieve operating
cash neutrality during the third quarter 2013, assuming gold and
silver prices of $1,600 per ounce and
$30 per ounce, respectively.
The Company's production increased approximately 25
percent on a silver equivalent daily basis in the first half of the
year compared to the previous year but prices decreased
significantly below the $1,600 and
$30 per ounce levels, with decreased
prices being the principal reason for the suspension of operations.
The Company has placed the mine and processing plants on care
and maintenance to enable a restart when operating plans and
then-current metals prices support a cash positive outlook for
operations. Approximately 440 positions at the Velardena
Operations have been eliminated as a result of the suspension and
the Company has retained a core group of approximately 40 employees
to facilitate a restart of operations and to maintain and safeguard
the longer term value of the asset.
Since June 19, the Company has
focused on developing and evaluating alternative plans for a
restart of operations at Velardena. The Company continues
work on a restart plan that could include a long hole stoping
mining method for ore extraction, which would require initial
capital costs of approximately $4.0 million
to $5.0 million excluding working capital, and a nine month
new stope development period followed by a ramp up in
production. Additionally, the Company plans to review
alternative high grade narrow vein mining methods to determine the
most beneficial mining method for a potential restart.
The Company has been mapping and sampling underground veins
containing higher grade shoots to verify mine modeling in support
of restart planning. Generally, results to date have shown
higher grades but narrower widths in the mineralized portions of
the veins than previously modeled. Although the analysis is
not complete, management believes the net result to date of this
verification process has been to generally decrease the projected
grades due to the dilution required to obtain workable mining
widths utilizing the modified long hole stoping method.
Work continued in the third quarter on treatment options to
improve gold recoveries from gold-bearing pyrites ore.
Testing to date for an autoclave process and roasting technologies
has demonstrated significant improvement in recoveries but both of
these processes require a larger-scale mining project than data
currently suggests is feasible. Other enhanced recovery
technologies, including fine grinding and leaching, ferric chloride
oxidation and leaching and other oxidation processes, have not
demonstrated an economic benefit in lab testing thus far.
Additionally, the Company is actively searching for oxide feed
from outside sources, which could enable a restart of the
Velardena oxide plant ahead of and
possibly during implementation of an economic restart operating
plan.
El Quevar Update
In early 2013, Golden completed
a 2,400 meter, 16-hole drilling program at the Quevar North and
South areas at El Quevar. Results may represent a significant
extension of the previously defined Yaxtche deposit and a
mineralized zone at Quevar North similar in structural control to
the Yaxtche zone. In order to advance El Quevar, the Company
is actively soliciting a partner to move the project forward with
additional drilling in these areas, drilling in other potential
areas and evaluations.
Exploration Update
Recently Golden acquired the
233-hectare Los Azules property in Chihuahua, Mexico under a purchase agreement
with Minera Socavato, a private Mexico mining company. The Company is
continuing to rehabilitate an underground access tunnel as required
for the planned underground drilling program. Although
progress on the underground rehabilitation has been slower than
expected, the Company plans to commence in the fourth quarter 2013
a drilling program of approximately 2000 meters to test the down
dip continuation of the previously mined veins. Past
production at Los Azules was estimated at 500,000 tonnes of 11
grams per tonne gold and 35 grams per tonne silver by Servicio
Geologico Mexicano (p. 411 of Monografia Geologico-Minero del
Estado de Chihuahua, 2007).
Golden has made significant
progress with its ongoing strategy to rationalize its portfolio of
exploration properties, realizing in 2012 and the first quarter
2013 exploration property sales totaling approximately $9.0 million including approximately
$3.5 million for most of the
Company's exploration properties in Peru. The Company has also closed its
office in Peru, relinquished
properties no longer of interest, and has reduced its portfolio of
about 80 properties containing about 730,000 hectares to about 40
properties containing about 320,000 hectares. Since 2011, the
Company has reduced ongoing annual expenditures for the exploration
program by approximately 75 percent.
Financial Outlook
During the fourth quarter 2013, the Company anticipates spending
approximately $1.5 million for
remaining suspension costs and care and maintenance activities at
Velardena as well as $0.5 million for project costs at El Quevar.
Additionally, the Company anticipates spending approximately
$1.0 million on other exploration
activities and property holding costs, $1.5
million on general and administrative costs, and
$1.0 million related to insurance
premium pre-payments and a further reduction of accrued liabilities
relating to suspension activities at Velardena. The Company
therefore anticipates a cash balance of approximately $18.0 million at year-end 2013, or $2.0 million higher than the Company's previous
estimate. Full-year 2013 general and administrative costs are
estimated at approximately $6.1
million or 14 percent less than in 2012. Exploration
expenses for full-year 2013 are estimated at approximately
$4.8 million or 31 percent less than
in 2012.
Additional information regarding third quarter 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 that owns the Velardena Operations in Mexico and the evaluation stage El Quevar
project in Argentina. The Company is primarily focused on
efforts to develop new operating plans for the Velardena mining operations, to advance El
Quevar, and to further exploration as well as continue to monetize
and rationalize exploration properties in South America and Mexico.
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 laws,
including statements regarding estimated capital costs and time
required to implement a potential long-hole stoping restart plan;
current results from mine model verification procedures;
anticipated costs in the fourth quarter 2013 related to the
suspension of production at the Velardena Operations and continued
care and maintenance of the assets, anticipated expenditures on
exploration and El Quevar, and general and administrative
costs; the continuation of planned activities during the
production suspension period including activities related to
validation of mine planning data, development and evaluation of
potential new operating strategies; planned drilling on the Los
Azules property; and anticipated year-end 2013 cash and cash
equivalents. These statements are subject to risks and
uncertainties, including unexpected events at the Velardena
Operations, including higher than anticipated suspension or care
and maintenance costs, accidents or damage to equipment or
environmental or permitting problems; difficulties in or inability
to develop a new operating plan for production at a sustainable
cash positive margin, which could be caused by, among other things,
inability to confirm the new mine model, variations in ore grade
and relative amounts, grades and metallurgical characteristics of
oxide and sulfide ores; labor or union problems; delays or failure
in receiving or maintaining required government approvals or
permits; technical, permitting, mining, metallurgical or processing
issues; inability to identify a treatment option to improve gold
recoveries; further decreases in silver and gold prices; loss of
and inability to adequately replace skilled mining and management
personnel; interpretations and changes in interpretations of
geologic information; volatility or other changes in the U.S. and
Canadian securities markets; availability and cost of materials,
supplies and electrical power required for mining operations and
exploration; fluctuations in costs and general economic conditions;
changes in political conditions, tax, environmental and other laws;
and diminution of physical safety of employees in Mexico, and other conditions in the countries
in which the Company operates. Additional risks relating to
Golden Minerals Company may be found in the periodic and current
reports filed with the Securities Exchange Commission by Golden
Minerals Company, including the Annual Report on Form 10-K for the
year ended December 31, 2012 and the
Quarterly Report on Form 10-Q for the quarter ended September 30, 2013.
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
Investor.relations@goldenminerals.com
|
GOLDEN MINERALS
COMPANY
CONSOLIDATED BALANCE SHEETS
(Expressed in United States dollars)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
2013
|
|
2012
|
|
|
|
(unaudited)
|
|
|
|
|
|
(in thousands,
except share data)
|
Assets
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
23,823
|
|
$
44,406
|
|
Investments
|
-
|
|
242
|
|
Trade
receivables
|
244
|
|
1,291
|
|
Inventories
|
492
|
|
3,388
|
|
Value added tax
receivable
|
1,739
|
|
4,422
|
|
Prepaid expenses and
other assets
|
815
|
|
1,044
|
|
|
Total current
assets
|
27,113
|
|
54,793
|
Property, plant and
equipment, net
|
39,418
|
|
280,905
|
Assets held for
sale
|
-
|
|
575
|
Goodwill
|
487
|
|
11,666
|
Prepaid expenses and
other assets
|
63
|
|
163
|
|
|
Total
assets
|
$
67,081
|
|
$
348,102
|
Liabilities and
Equity
|
|
|
|
Current
liabilities
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
$
1,900
|
|
$
6,232
|
|
Other current
liabilities
|
6,164
|
|
7,074
|
|
|
Total current
liabilities
|
8,064
|
|
13,306
|
|
Asset retirement
obligation
|
2,571
|
|
2,259
|
|
Deferred tax
liability
|
-
|
|
47,072
|
Other long term
liabilities
|
76
|
|
193
|
|
|
Total
liabilities
|
10,711
|
|
62,830
|
|
|
|
|
|
|
Commitments and
contingencies
|
|
|
|
Equity
|
|
|
|
|
Common stock, $.01
par value, 100,000,000 shares authorized;
43,327,833 and 43,265,833 shares issued and outstanding,
respectively
|
433
|
|
433
|
|
Additional paid in
capital
|
494,459
|
|
493,175
|
|
Accumulated
deficit
|
(438,522)
|
|
(208,246)
|
|
Accumulated other
comprehensive loss
|
-
|
|
(90)
|
|
|
Parent company's
shareholder's equity
|
56,370
|
|
285,272
|
|
|
Total liabilities and
equity
|
$
67,081
|
|
$
348,102
|
|
|
GOLDEN MINERALS
COMPANY
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(LOSS)
(Expressed in United States dollars) (Unaudited)
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
September
30,
|
|
September
30,
|
|
|
|
2013
|
|
2012
|
|
2013
|
|
2012
|
|
|
|
(in thousands,
except share data)
|
Revenue:
|
|
|
|
|
|
|
|
|
Sale of
metals
|
$
500
|
|
$
7,063
|
|
$
10,797
|
|
$
18,384
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
Costs applicable to
sale of metals (exclusive
|
|
|
|
|
|
|
|
|
|
of depreciation shown
below)
|
(517)
|
|
(8,573)
|
|
(17,534)
|
|
(23,103)
|
|
Exploration
expense
|
(1,024)
|
|
(1,207)
|
|
(3,788)
|
|
(5,419)
|
|
El Quevar project
expense
|
(486)
|
|
(985)
|
|
(2,159)
|
|
(3,574)
|
|
Velardena project
expense
|
(85)
|
|
(767)
|
|
(3,006)
|
|
(6,291)
|
|
Velardena shutdown
and care & maintenance costs
|
(2,218)
|
|
-
|
|
(4,547)
|
|
-
|
|
Administrative
expense
|
(1,078)
|
|
(1,934)
|
|
(4,608)
|
|
(5,787)
|
|
Stock based
compensation
|
(305)
|
|
(308)
|
|
(1,284)
|
|
(831)
|
|
Reclamation and
accretion expense
|
(47)
|
|
(40)
|
|
(135)
|
|
(185)
|
|
Impairment of long
lived assets
|
-
|
|
-
|
|
(237,838)
|
|
-
|
|
Impairment of
goodwill
|
-
|
|
(57,213)
|
|
(11,180)
|
|
(57,213)
|
|
Other operating
income & (expenses), net
|
(31)
|
|
264
|
|
3,615
|
|
479
|
|
Depreciation,
depletion and amortization
|
(1,083)
|
|
(2,774)
|
|
(6,180)
|
|
(6,617)
|
|
|
Total costs and
expenses
|
(6,874)
|
|
(73,537)
|
|
(288,644)
|
|
(108,541)
|
|
Loss from
operations
|
(6,374)
|
|
(66,474)
|
|
(277,847)
|
|
(90,157)
|
Other income and
(expense):
|
|
|
|
|
|
|
|
|
Interest and other
income, net
|
186
|
|
162
|
|
509
|
|
2,323
|
|
Royalty
income
|
-
|
|
14
|
|
-
|
|
371
|
|
Gain (loss) on
foreign currency
|
(127)
|
|
368
|
|
(537)
|
|
802
|
|
|
Total other income
and (expense)
|
59
|
|
544
|
|
(28)
|
|
3,496
|
|
Loss from operations
before income taxes
|
(6,315)
|
|
(65,930)
|
|
(277,875)
|
|
(86,661)
|
|
Income tax
benefit
|
104
|
|
2,614
|
|
47,599
|
|
5,574
|
|
Net loss
|
$
(6,211)
|
|
$
(63,316)
|
|
$
(230,276)
|
|
$
(81,087)
|
Comprehensive
loss:
|
|
|
|
|
|
|
|
|
Unrealized gain on
securities
|
-
|
|
166
|
|
90
|
|
107
|
|
Comprehensive
loss
|
$
(6,211)
|
|
$
(63,150)
|
|
$
(230,186)
|
|
$
(80,980)
|
Net loss per
common share – basic
|
|
|
|
|
|
|
|
|
Loss
|
$
(0.14)
|
|
$
(1.74)
|
|
$
(5.38)
|
|
$
(2.27)
|
Weighted average
common stock outstanding - basic (1)
|
42,857,347
|
|
36,318,747
|
|
42,827,891
|
|
35,762,251
|
|
(1) Potentially
dilutive shares have not been included because to do so would be
anti-dilutive.
|
|
SOURCE Golden Minerals Company