Golden Minerals Company (“Golden Minerals”, “Golden” or the
“Company”) (NYSE American:AUMN) (TSX:AUMN) has today announced
financial results for the full year ending December 31, 2017.
2017 Financial Highlights
- Cash and equivalents $3.3 million as of December 31, 2017, $0.7
million higher than the $2.6 million on hand as of December 31,
2016
- Received $1.0M in February 2018 for an amendment of the Celaya
farm-out agreement
- Zero debt, unchanged from year end 2016
- Loss from operations narrowed by 39 percent to $3.9 million in
2017 from $6.3 million in 2016
- Net loss narrowed by 63 percent to $3.9 million in 2017 from
$10.7 million in 2016
- Revenue of $6.7 million and operating margin of $4.5 million
from the lease of Velardeña’s oxide plant to Hecla Mining Company
(“Hecla”), compared to $6.4 million and $4.4 million, respectively,
in 2016
- Received $1.9 million net cash from Hecla in exchange for
granting an option to extend the lease of our oxide plant through
2020
- Generated an additional $2.6 million cash from the sale and
farm-out of non-strategic properties and equipment and from
Argentina tax refunds, and raised an additional $0.7 million from
the issuance of common stock through the Company’s ATM program
Business Summary
Oxide Mill Lease
2017 marked the second full year of the
Company’s lease to Hecla of its oxide mill located at the Velardeña
Properties in Durango State, Mexico. In August, Golden granted
Hecla an option to extend the lease for an additional period of up
to two years past the then-current expiration date of December 31,
2018, in exchange for a $1.0 million cash payment and the purchase
of $1.0 million, or approximately 1.8 million shares, of the
Company’s common stock. Hecla must exercise the option to extend
the lease no later than October 3, 2018.
During 2017, Hecla processed approximately
131,000 tonnes of material through the plant, resulting in total
revenue to Golden of approximately $6.7 million, which was
comprised of approximately $3.0 million for direct plant charges,
plus fixed fees and other net reimbursable costs totaling
approximately $3.7 million. Golden incurred expenses of
approximately $2.1 million related to the services it provides
under the lease, resulting in a net operating margin of $4.5
million.
El Quevar
In the third quarter 2017, the Company began a
re-modeling project designed to identify a smaller but higher-grade
mineral resource within the Yaxtché deposit, an area representing a
two-kilometer strike length located within the much larger
57,000-hectare El Quevar project. In support of this effort, the
Company retained Amec Foster Wheeler E&C Services, Inc, a Wood
Group PLC company (“Wood”), to complete an updated Mineral Resource
estimate in accordance with Canadian National Instrument 43-101
(“NI 43-101”). The estimate is based on the same drilling data as
the 2012 technical report prepared by RPMGlobal (formerly Pincock
Allen & Holt; “RPM”) but uses updated geologic controls and a
modeling approach designed to delineate the higher-grade
mineralization. The results of that project were presented in a
recent news release dated February 28, 2018 that highlighted an
updated NI 43-101 mineral resource at El Quevar consisting of 2.6M
tonnes of indicated sulfide material at 487 grams per tonne (“gpt”)
silver and 0.3 M tonnes of inferred sulfide material at 417 gpt
silver based on a 250 gpt silver cutoff grade. The new resource is
in an underground minable setting. See the section of this release
entitled El Quevar Resource Estimate Information
for additional details.
In the next several months, Golden plans to
proceed with a Preliminary Economic Assessment that will use the
new Yaxtché resource as a basis. The Company plans to advance
El Quevar as much as possible within the limits of its current
exploration budget, and remains open to finding a partner to
contribute to the funding of further exploration and
development.
Santa Maria
Through the end of 2017, Golden drilled 14 holes
totaling approximately 3,300 meters and received completed assay
results showing mineralized intercepts in most of the holes. The
Company increased the drill program from an original 2,000 meters
to about 4,800 meters due to geologic complexity along the eastern
extension and newly encountered mineralization on the western
extension of the vein system. Based on the results of the
2017 drilling program, the Company anticipates being able to
increase the size of the existing resource estimate, although the
extent of that increase has not yet been determined. Golden is
continuing to drill in 2018 and has completed 1,000 meters in five
drill holes. The Company will likely complete another 500 meters in
three additional drill holes before completing the program, after
which all drill results will be reviewed and the existing mineral
resource and PEA updated.
Celaya Farm-out
In February 2018, Golden amended the agreement
with Electrum Global Holdings L.P. (“Electrum”) to permit Electrum
to earn, at its option, an additional 20 percent interest in the
project in exchange for a $1.0 million payment. Electrum can now
increase its total interest in the project to 80 percent by
contributing 100 percent of the $2.5 million of additional
expenditures required in the second three-year earn-in period.
Following this second earn-in period (after $5.0 million total is
spent from inception), Golden will have the right to maintain its
20 percent interest in the project or may elect to convert to a
carried 10 percent net profits interest.
Electrum has reported completing 12,400 meters
of drilling on the property in 15 holes, with drilling ongoing.
Results to date show intercepts of epithermal quartz vein
mineralization with grades for gold, silver, lead and zinc that
warrant further drill testing. In eight of the 14 holes assayed to
date, intercepts of quartz vein material carry gold and silver
grades that are within the range of economic interest, if
sufficient volumes can be found in a configuration amenable to
exploitation.
Mogotes
In the fourth quarter 2017 the Company completed
a 2,580-meter, 8-hole drill program at its Mogotes property located
seven kilometers from the town of Velardeña in Durango State,
Mexico. Results showed low grade gold mineralization in two of the
holes. The epithermal system appears to be more deeply centered
than the surface geochemical values initially indicated.
Additional targeting work is being carried out on the Mogotes
claims including geologic mapping and sampling focused on several
outcropping veins in the northern portion of the claims and on the
Company’s adjacent Pistachon claim, part of the Chicago mine
holdings.
Financial Results
The Company reported revenue of $6.7 million and
a net operating margin of $4.5 million in 2017, compared to $6.4
million and $4.4 million in 2016, respectively. Both are wholly
attributable to the lease of the Company’s Velardeña oxide plant to
Hecla. Additionally, the Company recorded approximately $2.1
million in other operating income in 2017, or $0.3 million more
than in 2016. The 2017 amount consists primarily of net gains on
the sales of varied fixed assets and non-strategic exploration
properties, and includes approximately $0.1 million of the $1.0
million lease option extension payment received from Hecla in
August 2017. The remaining $0.9 million has been recorded as
deferred revenue and will be amortized to other operating income
through December 31, 2020.
Total expenses of approximately $10.6 million in
2017 were $2.2 million or 17 percent lower than the $12.7 million
of total expenses recorded in 2016. Reductions were seen in areas
including Velardeña care and maintenance, exploration expense and
administrative expense. El Quevar project expense increased
by $0.3 million to $0.8 million in 2017, reflecting work around the
re-modeling project begun in the second half of the year.
Loss from operations was $3.9 million in 2017,
improving by 39 percent compared to a loss from operations of $6.3
million in 2016. The Company reported a net loss of $3.9 million in
2017, compared to a net loss of $10.7 million in 2016. Included in
the 2016 net loss were non-cash derivative losses of $2.5 million
related to the Company’s warrants and to a now-retired loan from
The Sentient Group. Due to an accounting principle change (See Note
3 in the Company’s 10-K report for full details), the Company had
no warrant derivative gain or loss in 2017. Also included in the
2016 net loss was a $1.7 million non-cash loss associated with the
extinguishment of The Sentient Group loan. The loan was retired in
2016 so there was no comparable figure in 2017.
Cash and Financial Outlook
The Company reported a cash and equivalents
balance of $3.3 million at year end 2017, $0.7 million higher than
the $2.6 million on hand at year end 2016. Cash inflows during 2017
totaled $9.7 million and included the following:
- $4.5 million of net operating margin from the oxide plant
lease
- $1.9 million from Hecla for the option to extend the oxide
plant lease for an additional period of up to two years
- $1.1 million in refunds of previous VAT payments made in
Argentina during 2012 and 2013
- $1.0 million related to the sale of excess mining equipment and
varied nonstrategic exploration properties
- $0.7 million of net proceeds received from the issuance of
common stock under the ATM Program
- $0.5 million from the farm out of certain nonstrategic mineral
claims to Santacruz
Cash expenditures during 2017 totaled $9.0 million
and included the following:
- $3.1 million in exploration expenditures, including costs
related to drilling at Santa Maria and Mogotes
- $1.6 million in care and maintenance costs at the Velardeña
Properties
- $0.8 million in evaluation activities, care and maintenance and
property holding costs at El Quevar
- $3.5 million in general and administrative expenses
In addition to the $3.3 million cash balance at
December 31, 2017, during 2018 Golden expects to receive
approximately $4.6 million in net operating margin from the oxide
plant lease and $0.7 million from Santacruz related to the
Zacatecas farm-out. In February 2018, the Company received $1.0
million from Electrum related to an amendment of the Celaya farm
out agreement. If no additional sales of common stock under the ATM
program occur, Golden projects it would end 2018 with a cash
balance of $1.5 million based on the following forecasted
expenditures during 2018:
- Approximately $2.0 million on exploration activities and
property holding costs, including project assessment and evaluation
costs related to Santa Maria, Yoquivo and other properties
- Approximately $1.5 million at the Velardeña Properties for care
and maintenance
- Approximately $1.0 million at El Quevar to fund ongoing
exploration and evaluation activities, care and maintenance and
property holding costs
- Approximately $3.4 million on general and administrative
costs
- Approximately $0.2 million on other working capital
Additional information regarding full year 2017
financial results may be found in the Company’s Annual Report on
Form 10-K 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 acquiring
and advancing mining properties in Mexico with emphasis on areas
near its Velardeña processing plants, and on advancing its El
Quevar project located in Salta, Argentina.
El Quevar Resource Estimate
Information
Wood is an independent engineering
consultancy. Mr. Gordon Seibel, RM SME, a Principal Geologist
with Wood, reviewed and approved the portions of this press release
regarding the new Mineral Resource estimates and data
verification.
The drill data supporting the Mineral Resource
estimate were collected between 2006 and 2011, and there has been
no drilling on the property since 2011. Qualified Persons
from independent engineering consulting firm Pincock Allen and Holt
(PAH) and now part RPMGlobal visited the site during the 2011 drill
program. PAH observed and interviewed Golden Minerals
personnel in the procedures of core handling, sampling, logging and
sample security that were performed at the Golden Minerals base
camp. PAH concluded that the drilling density, core
recovery, and drill hole location surveying were industry standard
and acceptable for use in resource estimation.
PAH also reviewed sample preparation
procedures, assaying methods and QA/QC protocols when all drill
results were available. PAH noted that overall the
sample preparation, analysis and security are industry standard and
would not introduce a general bias into resource
estimation.
Wood independently compiled the assay data
directly from the assay laboratories and compared the data to the
database supplied by Golden Minerals which included all of the
drill data that had previously been verified by PAH. Wood
considers the database to be acceptable to support Mineral Resource
estimation.
The technical contents of this press release
have been reviewed and approved by Warren M. Rehn, M.Sc., a
Qualified Person for the purposes of NI 43-101. Mr.
Rehn has over 33 years of mineral exploration experience and is a
QP member (01449QP) of the Mining and Metallurgical Society of
America. Mr. Rehn is President, Chief Executive Officer and a
Director of Golden Minerals Company.
The resource estimate is preliminary in nature
and includes Inferred mineral resources that are considered too
speculative geologically to have the economic considerations
applied to them that would enable them to be categorized as mineral
reserves.
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 expectations
regarding the oxide plant lease including its duration; future
activities at El Quevar, including the timing of a PEA based on the
new Yaxtché resource, the likelihood of future expansion of the
deposit, and the possibility of future development;
expectations related to our Santa Maria property, including
planned exploration and other evaluation work and the possibility
of increasing the size of the existing resource estimate; and
statements regarding our financial outlook, including anticipated
2018 income and expenditures, and our estimated year-end cash
balance. 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 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 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.
|
GOLDEN MINERALS COMPANY |
CONSOLIDATED BALANCE SHEETS |
(Expressed in United States
dollars) |
|
|
|
|
|
|
|
|
|
December
31, |
|
December
31, |
|
|
2017 |
|
2016 |
|
|
(in thousands, except share data) |
Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
3,250 |
|
|
$ |
2,588 |
|
Short-term investments |
|
|
238 |
|
|
|
334 |
|
Lease
receivables |
|
|
314 |
|
|
|
380 |
|
Inventories, net |
|
|
242 |
|
|
|
245 |
|
Value
added tax receivable, net |
|
|
148 |
|
|
|
5 |
|
Related
party receivable |
|
|
— |
|
|
|
643 |
|
Prepaid
expenses and other assets |
|
|
745 |
|
|
|
578 |
|
Total
current assets |
|
|
4,937 |
|
|
|
4,773 |
|
Property, plant and
equipment, net |
|
|
8,140 |
|
|
|
9,235 |
|
Total
assets |
|
$ |
13,077 |
|
|
$ |
14,008 |
|
|
|
|
|
|
|
|
Liabilities and
Equity |
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable and other accrued liabilities |
|
$ |
1,556 |
|
|
$ |
1,224 |
|
|
|
|
|
|
|
|
|
|
Deferred
revenue, current |
|
|
293 |
|
|
|
— |
|
Other
current liabilities |
|
|
9 |
|
|
|
24 |
|
Total
current liabilities |
|
|
1,858 |
|
|
|
1,248 |
|
Asset retirement and
reclamation liabilities |
|
|
2,495 |
|
|
|
2,434 |
|
Deferred revenue,
non-current |
|
|
600 |
|
|
|
— |
|
Warrant liability -
related party |
|
|
— |
|
|
|
976 |
|
Warrant
liability |
|
|
— |
|
|
|
922 |
|
Other long term
liabilities |
|
|
43 |
|
|
|
66 |
|
Total
liabilities |
|
|
4,996 |
|
|
|
5,646 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common
stock, $.01 par value, 200,000,000 shares authorized; 91,929,709
and 89,020,041 shares issued and outstanding, respectively |
|
|
919 |
|
|
|
889 |
|
Additional paid in capital |
|
|
516,284 |
|
|
|
495,455 |
|
Accumulated deficit |
|
|
(509,082 |
) |
|
|
(488,037 |
) |
Accumulated other comprehensive (loss) income |
|
|
(40 |
) |
|
|
55 |
|
Shareholders' equity |
|
|
8,081 |
|
|
|
8,362 |
|
Total
liabilities and equity |
|
$ |
13,077 |
|
|
$ |
14,008 |
|
|
|
|
|
|
|
|
|
GOLDEN MINERALS COMPANY |
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS |
(Expressed in United States
dollars) |
|
|
|
|
|
|
|
|
|
Year Ended |
|
|
December
31, |
|
|
2017 |
|
2016 |
|
|
(in thousands, except per share data) |
Revenue: |
|
|
|
|
|
|
Oxide
plant lease |
|
$ |
6,691 |
|
|
$ |
6,400 |
|
Total
revenue |
|
|
6,691 |
|
|
|
6,400 |
|
Costs and
expenses: |
|
|
|
|
|
|
Oxide
plant lease costs |
|
|
(2,189 |
) |
|
|
(2,046 |
) |
Exploration expense |
|
|
(3,091 |
) |
|
|
(3,718 |
) |
El Quevar
project expense |
|
|
(822 |
) |
|
|
(508 |
) |
Velardeña
shutdown and care and maintenance costs |
|
|
(1,589 |
) |
|
|
(2,016 |
) |
Administrative expense |
|
|
(3,512 |
) |
|
|
(3,890 |
) |
Stock
based compensation |
|
|
(296 |
) |
|
|
(593 |
) |
Reclamation expense |
|
|
(196 |
) |
|
|
(192 |
) |
Other
operating income, net |
|
|
2,093 |
|
|
|
1,790 |
|
Depreciation and amortization |
|
|
(952 |
) |
|
|
(1,548 |
) |
Total
costs and expenses |
|
|
(10,554 |
) |
|
|
(12,721 |
) |
Loss from
operations |
|
|
(3,863 |
) |
|
|
(6,321 |
) |
Other income
and (expense): |
|
|
|
|
|
|
Interest
expense |
|
|
— |
|
|
|
(515 |
) |
Interest
and other income |
|
|
37 |
|
|
|
390 |
|
Warrant
derivative loss |
|
|
— |
|
|
|
(1,688 |
) |
Derivative loss |
|
|
— |
|
|
|
(778 |
) |
Loss on
debt extinguishment |
|
|
— |
|
|
|
(1,653 |
) |
Loss on
foreign currency |
|
|
(53 |
) |
|
|
(94 |
) |
Total
other income (expense) |
|
|
(16 |
) |
|
|
(4,338 |
) |
Loss from
operations before income taxes |
|
|
(3,879 |
) |
|
|
(10,659 |
) |
Income
tax expense |
|
|
(13 |
) |
|
|
— |
|
Net
loss |
|
$ |
(3,892 |
) |
|
$ |
(10,659 |
) |
Comprehensive
loss, net of tax: |
|
|
|
|
|
|
Unrealized (loss) gain on securities |
|
|
(95 |
) |
|
|
182 |
|
Comprehensive loss |
|
$ |
(3,987 |
) |
|
$ |
(10,477 |
) |
Net loss per
common share — basic |
|
|
|
|
|
|
Loss |
|
$ |
(0 |
) |
|
$ |
(0 |
) |
Weighted
average Common Stock outstanding - basic (1) |
|
|
90,468,606 |
|
|
|
81,651,896 |
|
|
|
|
|
|
|
|
(1)
Potentially dilutive shares have not been included because to do so
would be anti-dilutive. |
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
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