Golden Minerals loses $1.76-million (U.S.) in Q3

2019-11-13 07:56 ET - News Release

Ms. Karen Winkler reports

GOLDEN MINERALS REPORTS THIRD QUARTER 2019 RESULTS

Golden Minerals Company has released financial results for the quarter ending Sept. 30, 2019.

Third quarter summary financial results

• Revenue of $1.9-million (U.S.) and a net operating margin of $1.3-million related to the lease of the company's oxide plant in Mexico to Hecla Mining Co.;
• Cash and cash equivalents balance of $2.9-million as of Sept. 30, 2019, compared with $3.3-million at year-end 2018;
• Exploration expenses of $900,000 in the third quarter 2019 compared with $1.1-million in the year ago period;
• El Quevar project expenses of $600,000 in the current quarter compared with $0.4-million in the year ago period;
• Net loss of $1.8-million or two cents per share in the third quarter 2019, compared with net income of $1.6-million or two cents per share in the third quarter 2018.

Financial results

In the third quarter 2019, Golden Minerals reported (all figures approximate) revenue of $1.9-million related to its lease of Velardena's oxide mill and costs of approximately $600,000 related to the services Golden provides under the terms of the lease, for a net operating margin of $1.3-million. Exploration expenses were $900,000 in the third quarter, reflecting work at Sand Canyon (Nevada), Yoquivo, Santa Maria and other properties primarily in Mexico, as well as property holding costs and allocated administrative expenses. El Quevar project expenses were $600,000 in the third quarter and include costs associated with the 2019 drilling program as well as project evaluation and property holding costs. Velardena care and maintenance costs were $400,000 during the third quarter. Administrative expenses were $700,000 in the third quarter 2019 and include costs associated with being a public company and are incurred primarily by the company's corporate activities in support of the company's portfolio of properties. Golden reported a net loss of $1.8-million or two cents per share in the third quarter 2019 compared with net income of $1.6-million or two cents per share in the year ago period.

On June 26, 2019, the company announced its intent to sell certain Mexican assets to Compania Minera Autlan SAB de CV. In connection with the intended transaction, Golden reported the operational results of Velardena and related subsidiaries in its second quarter 2019 financial statements as discontinued operations and assets held for sale. Due to the ultimate termination of the agreement in September, the company is no longer reporting the Velardena properties and related subsidiaries as discontinued operations and assets held for sale.

Subsequent event

On Oct. 16, 2019, the company entered into an agreement to sell its option to earn a 100-per-cent interest in the Santa Maria and Las Marias exploration properties to Magellan Gold Corp. The agreement provides for a period of up to 150 days for Magellan to complete due diligence and secure financing for the project. If Magellan exercises its option, it will make a cash payment of $1.0-million to Golden Minerals upon closing. Golden Minerals will retain a 6.5-per-cent net smelter returns royalty from all production at Santa Maria until a total of $3.0-million has been paid to the company. Thereafter, Golden will retain a 3.0-per-cent NSR royalty for the balance of the mine's life. The company had previously expensed all costs associated with the two properties and will record income from the agreement as cash is received.

12-month financial outlook

Golden Minerals ended the third quarter 2019 with a cash balance of $2.9-million. In October, 2019, the company entered into an option to purchase agreement for the sale of its interest in the Santa Maria property and expects to receive an initial cash payment from Magellan of $1.0-million by the end of the first quarter 2020. In addition, the company expects to receive approximately $4.8-million in net operating margin from the lease of its oxide plant through the end of the third quarter 2020. The company's currently budgeted expenditures for the 12-month period ending Sept. 30, 2020, are as follows:

• Approximately $2.5-million on exploration activities and property holding costs related to the company's portfolio of exploration properties located in Mexico, Nevada and Argentina, including project assessment and evaluation costs relating to Yoquivo, Sand Canyon and other properties;
• Approximately $1.6-million at the Velardena properties for care and maintenance;
• Approximately $1.5-million for repayment of the deposit associated with the Autlan transaction;
• Approximately $800,000 at the El Quevar project to finance continuing exploration and evaluation activities, care and maintenance and property holding costs;
• Approximately $3.1-million on general and administrative costs;
• Approximately $300,000 for income tax payments due in Canada.

The company's currently budgeted expenditures are slightly greater than its resources noted above. Therefore, during the next 12 months ending Sept. 30, 2020, the company will take appropriate actions which may include sales of certain of the company's exploration assets, reductions to the company's currently budgeted level of spending, and/or raising additional equity capital through sales under the company's ATM program, the LPC program or otherwise.

Additional information regarding third quarter 2019 financial results may be found in the company's 10-Q quarterly report which is available on the Golden Minerals website.

About Golden Minerals Company

Golden Minerals is a Delaware corporation based in Golden, Colo. The company is primarily focused on advancing its Velardena properties in Mexico and its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico and Nevada.

  
 
                     CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                               (in thousands of U.S. dollars)
 
                                                          Three months ended         Nine months ended
                                                                    Sept. 30,                 Sept. 30,
                                                           2019         2018        2019          2018
Revenue
Oxide plant lease                                        $1,944       $1,900       $5,852       $5,267
Total revenue                                             1,944        1,900        5,852        5,267
Costs and expenses
Oxide plant lease costs                                    (594)        (657)      (1,804)      (1,685)
Exploration expense                                        (935)      (1,077)      (3,119)      (3,017)
El Quevar project expense                                  (582)        (364)      (1,584)        (917)
Velardena shutdown and care and maintenance costs          (422)        (428)      (1,391)      (1,409)
Administrative expense                                     (742)        (673)      (2,784)      (2,556)
Stock based compensation                                    (72)         139         (725)        (111)
Reclamation expense                                         (57)         (53)        (171)        (156)
Other operating income, net                                  45        3,188          225        4,638
Depreciation and amortization                              (270)        (337)        (814)        (897)
Total costs and expenses                                 (3,629)        (262)      12,167)      (6,110)
Income (loss) from operations                            (1,685)        1,638      (6,315)        (843)
Other income and (expense)
Interest and other income (expense), net                    (42)         (59)        (182)          54
Gain (loss) on foreign currency                             (24)           7          (63)         (46)
Total other income (loss)                                   (66)         (52)        (245)           8
Income (loss) from operations before income taxes        (1,751)       1,586       (6,560)        (835)
Income taxes                                                 (9)          (1)          (9)          (4)
Net income (loss)                                        (1,760)       1,585       (6,569)        (839)
Net income (loss) per common share -- basic
Income (loss)                                             (0.02)        0.02        (0.07)       (0.01)
Net income (loss) per common share -- diluted
Income (loss)                                             (0.02)        0.02        (0.07)       (0.01)

                                                                                                                                   

We seek Safe Harbor.