GOLDEN, Colo., Nov. 3, 2016/PRNewswire/ -- Golden Minerals Company ('Golden Minerals' or the 'Company') (NYSE MKT: AUMN and TSX: AUM) provides a business update and announces results for the third quarter ended September 30, 2016.
Third Quarter Business Update
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Hecla exercised its right to extend its lease of the Company's Velardenaoxide plant for an additional six months, until June 30, 2017. Hecla has the right to extend the lease for an additional 18 months following June 30, 2017, or until December 31, 2018, under similar payment terms. The Company and Hecla previously reached agreement regarding an expansion of the tailings impoundment, at Hecla's cost, to accommodate processing at current levels until approximately December 31, 2018, plus an agreed capacity to remain unused. The agreed expansion plan preserves flexibility for future tailings expansion.
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The Company completed a farm-out agreement on the Celayaexploration property in Mexicowith Electrum Global Holdings, LP. Electrum can earn a 60 percent interest in exchange for a $0.2 millioncash payment made at signing and the expenditure of $2.5 millionon the property over three years. If the Company elects not to retain its 40 percent interest, Electrum can earn an additional 20 percent interest by spending an additional $2.5 million.
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The Company sold excess mining equipment for approximately $0.7 million, with 90 percent of the sales price to be paid in February 2017, and sold its 50 percent interest in the San Diegoexploration property to Golden Tag Resources, Ltd. for approximately $0.4 millionin cash, 2,500,000 common shares of Golden Tagand a two percent net smelter return royalty.
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The Company is evaluating underground drilling results at the Santa Mariaproperty and expects to update its estimate of resources and complete a Preliminary Economic Assessment during the fourth quarter 2016.
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The Company expects to complete in the fourth quarter 2016 the 2,000 meter core drilling program on the Rodeoproperty that it commenced in June 2016. Initial results show a gold and silver bearing epithermal vein and breccia system with encouraging gold and silver values over an approximate 50 to 70 meters true width.
Third Quarter Summary Results
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Revenue of $1.7 millionand positive net operating margin (oxide plant lease revenue less lease costs) of $1.2 millionrelated to the lease of the Company's oxide plant in the third quarter 2016, compared to no revenue and a negative net operating margin (sale of metals less costs of metals sold) of $0.8 millionin the third quarter 2015
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Loss from operations of $0.2 millionin the third quarter 2016 compared to a loss from operations of $17.6 millionin the third quarter 2015
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Net loss of $0.8 millionin the third quarter 2016, including non-cash derivative losses of $0.5 millionrelated to the Company's warrants, compared to a net loss of $16.8 millionin the third quarter 2015, which included a non-cash gain of $0.2 millionfrom the Company's warrants and $13.2 millionin expense related to the impairment of long-lived assets
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Cash and cash equivalents balance of $3.4 millionas of September 30, 2016
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Debt balance of zero as of September 30, 2016
Financial Results
The Company reported a net loss of $0.8 millionin the third quarter 2016 compared to a net loss of $16.8 millionin the third quarter 2015. The 2016 net loss includes $0.5 millionof non-cash derivative losses related to an increase in the fair value of the liability recorded for warrants to acquire the Company's common stock. (See Note 18 in the Company's Form 10-Q for the period ending September 30, 2016for complete details.) By comparison, the 2015 net loss of $16.8 millionincluded non-cash derivative income of $0.2 millionrelated to the Company's warrants and an asset impairment expense of $13.2 millionin connection with the shutdown of the Velardena Properties.
The Company recorded revenue of $1.7 millionrelated to the lease of the oxide plant in the third quarter 2016, compared to $1.8 millionrevenue from the sale of metals in the third quarter 2015. Operating costs in the third quarter 2016 were $2.0 millioncompared to $19.4 millionin the 2015 period. The decrease in operating costs year over year is largely due to the absence in the 2016 period of the $13.2 millionasset impairment expense previously mentioned and $2.6 millioncost of metals sold recorded in the third quarter 2015, plus the addition in 2016 of $1.3 millionin other operating income compared to minimal other operating income recorded in the third quarter 2015. The $1.3 millionin other operating income in the 2016 period is comprised of gains recorded related to the sale of excess mining equipment, the sale of the Company's remaining interest in the San Diegoexploration property and the farm-out of the Celayaproperty. See page 25, '2016 Highlights', of the Form 10-Q for the period ending September 30, 2016for additional details.
The Company's cash and cash equivalents balance of $3.4 millionon September 30, 2016was $0.7 millionlower than the year-end 2015 balance of $4.1 million. The reduction in cash during the first nine months of 2016 is due primarily to:
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$1.6 millionin shutdown and care and maintenance expenses at the Velardena Properties
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$2.9 millionin exploration expenditures, including costs related to drilling at the San Luisdel Cordero, Santa Mariaand Rodeoproperties
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$0.3 millionin care and maintenance plus property holding costs at the El Quevar project
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$3.1 millionin general and administrative expenses
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$0.6 millionfrom an increase in working capital primarily related to a decrease in deferred revenue from the lease of the Company's oxide plant resulting from the application of a 2015 $500,000advance payment to 2016 lease payments
These items were offset in part by:
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$0.9 millionof net proceeds from the sale of non-strategic exploration properties
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$3.3 millionof net operating margin received pursuant to the oxide plant lease
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$3.6 millionof net proceeds received in a registered direct offering of the Company's common stock in May 2016
Financial Outlook
In addition to the $3.4 millioncash balance at September 30, 2016, the Company expects to receive approximately $1.4 millionin the fourth quarter 2016: $1.2 millionin net operating margin from the lease of the oxide plant and $0.2 millionfrom the second quarter farm out of a non-strategic exploration property. In the third quarter, Hecla exercised its right to extend the lease for an additional six months until June 30, 2017, which the Company estimates should provide approximately $2.4 millionin net operating margin during the first seven months of 2017. As noted above, Hecla has an additional 18- month lease extension right. In addition, the Company expects to receive $0.6 millionin February 2017relating to the final payment for the sale of non-strategic mining equipment that occurred in the third quarter 2016.
The Company currently plans to spend approximately $1.8 millionduring the fourth quarter 2016, resulting in a projected cash balance at year-end 2016 of approximately $3.0 million:
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$0.4 millionat the Velardena Properties for care and maintenance;
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$0.5 millionon exploration activities and property holding costs related to exploration properties located primarily in Mexico, including project assessment and development costs related to the Santa Maria, Rodeoand other properties;
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$0.2 millionon El Quevar maintenance activities, property holding costs and continuing project evaluation costs; and
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$0.7 millionon general and administrative costs.
Additional information regarding third quarter 2016 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 Delawarecorporation based in Golden, Colorado. The Company is primarily focused on acquiring and advancing mining properties near its Velardenaprocessing plants and the exploration of properties in Mexicoand Argentina.
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 legislation, including statements regarding including the Company's planned expenditures during the fourth quarter 2016 and anticipated cash balance at year-end 2016; net operating margin expected to be received in the fourth quarter 2016 and first half of 2017 from a third party lease of the Velardenaoxide mill; amounts expected to be received in February 2017as the final payment in respect of an equipment sale; the planned fourth quarter 2016 drilling at the Rodeoproject and the planned fourth quarter 2016 update of Santa Mariaresources and completion of a Preliminary Economic Assessment. These statements are subject to risks and uncertainties, including: lower than anticipated net operating margin from the oxide plant lease due to problems at the third party's mine or the oxide plant resulting in less than anticipated production or due to processing delays or termination of the lease due to inability to obtain required permits or for other reasons; results from exploration and project assessments at the Santa Maria, Rodeoor other exploration properties and whether we will advance these or other exploration properties; potential delays in our exploration activities or other activities to advance properties towards mining resulting from environmental events or permitting delays or problems, accidents, problems with contractors, disputes under agreements related to exploration properties, unanticipated costs and other unexpected events; increases in costs and declines in general economic conditions; inability to raise external financing on acceptable terms or at all; 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 Securities and Exchange Commission by Golden Minerals, including the Company's Annual Report on Form 10-K for the year ended December 31, 2015.
Golden Minerals Company
Karen Winkler
Director of Investor Relations
(303) 839-5060
[email protected]
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GOLDEN MINERALS COMPANY
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CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
(Expressed in United States dollars)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Unaudited
|
|
|
|
|
September 30,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
|
(in thousands, except share data)
|
|
Assets
|
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
3,415
|
|
$
|
4,077
|
|
Short-term investments
|
|
456
|
|
|
72
|
|
Trade receivables
|
|
506
|
|
|
546
|
|
Inventories
|
|
264
|
|
|
330
|
|
Value added tax receivable, net
|
|
4
|
|
|
400
|
|
Related party receivable
|
|
642
|
|
|
-
|
|
Prepaid expenses and other assets
|
|
277
|
|
|
451
|
|
Total current assets
|
|
5,564
|
|
|
5,876
|
|
Property, plant and equipment, net
|
|
9,453
|
|
|
11,125
|
|
Total assets
|
$
|
15,017
|
|
$
|
17,001
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
|
Accounts payable and other accrued liabilities
|
$
|
1,406
|
|
$
|
1,144
|
|
Convertible note payable - related party, net
|
|
-
|
|
|
3,702
|
|
Derivative liability - related party
|
|
-
|
|
|
488
|
|
Deferred revenue
|
|
-
|
|
|
500
|
|
Other current liabilities
|
|
9
|
|
|
556
|
|
Total current liabilities
|
|
1,415
|
|
|
6,390
|
|
Asset retirement and reclamation liabilities
|
|
2,388
|
|
|
2,546
|
|
Warrant liability
|
|
3,031
|
|
|
210
|
|
Other long term liabilities
|
|
71
|
|
|
84
|
|
Total liabilities
|
|
6,905
|
|
|
9,230
|
|
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
Common stock, $.01 par value, 200,000,000 and 100,000,000 shares authorized; 88,920,041 and 53,335,333 shares issued and outstanding, respectively
|
|
889
|
|
|
534
|
|
Additional paid in capital
|
|
495,424
|
|
|
484,742
|
|
Accumulated deficit
|
|
(488,352)
|
|
|
(477,378)
|
|
Accumulated other comprehensive income (loss)
|
|
151
|
|
|
(127)
|
|
Shareholders' equity
|
|
8,112
|
|
|
7,771
|
|
Total liabilities and equity
|
$
|
15,017
|
|
$
|
17,001
|
|
GOLDEN MINERALS COMPANY
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
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|
(Expressed in United States dollars) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
September 30,
|
|
September 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(in thousands except per share data)
|
|
(in thousands, except per share data)
|
|
Revenue:
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxide plant lease
|
$
|
1,729
|
|
$
|
-
|
|
$
|
4,768
|
|
$
|
-
|
|
Sale of metals
|
|
-
|
|
|
1,788
|
|
|
-
|
|
|
6,086
|
|
Total revenue
|
|
1,729
|
|
|
1,788
|
|
|
4,768
|
|
|
6,086
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Oxide plant lease costs
|
|
(549)
|
|
|
-
|
|
|
(1,478)
|
|
|
-
|
|
Cost of metals sold (exclusive of depreciation shown below)
|
|
-
|
|
|
(2,598)
|
|
|
-
|
|
|
(8,385)
|
|
Exploration expense
|
|
(927)
|
|
|
(615)
|
|
|
(2,865)
|
|
|
(2,851)
|
|
El Quevar project (expense) income
|
|
65
|
|
|
(177)
|
|
|
(308)
|
|
|
(988)
|
|
Velardeña project expense
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(119)
|
|
Velardeña shutdown and care and maintenance costs
|
|
(456)
|
|
|
(393)
|
|
|
(1,589)
|
|
|
(393)
|
|
Administrative expense
|
|
(897)
|
|
|
(1,047)
|
|
|
(3,141)
|
|
|
(3,375)
|
|
Stock based compensation
|
|
(95)
|
|
|
(99)
|
|
|
(666)
|
|
|
(372)
|
|
Reclamation expense
|
|
(47)
|
|
|
(48)
|
|
|
(144)
|
|
|
(206)
|
|
Impairment of long lived assets
|
|
-
|
|
|
(13,181)
|
|
|
-
|
|
|
(13,181)
|
|
Other operating income, net
|
|
1,281
|
|
|
7
|
|
|
1,558
|
|
|
477
|
|
Depreciation, depletion and amortization
|
|
(346)
|
|
|
(1,209)
|
|
|
(1,317)
|
|
|
(3,743)
|
|
Total costs and expenses
|
|
(1,971)
|
|
|
(19,360)
|
|
|
(9,950)
|
|
|
(33,136)
|
|
Loss from operations
|
|
(242)
|
|
|
(17,572)
|
|
|
(5,182)
|
|
|
(27,050)
|
|
Other income and (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
-
|
|
|
-
|
|
|
(515)
|
|
|
-
|
|
Interest and other income
|
|
10
|
|
|
623
|
|
|
12
|
|
|
2,006
|
|
Warrant derivative (loss) gain
|
|
(545)
|
|
|
200
|
|
|
(2,821)
|
|
|
1,068
|
|
Derivative loss
|
|
-
|
|
|
-
|
|
|
(778)
|
|
|
-
|
|
Loss on debt extinguishment
|
|
-
|
|
|
|
|
|
(1,653)
|
|
|
-
|
|
Loss on foreign currency
|
|
(21)
|
|
|
(71)
|
|
|
(63)
|
|
|
(125)
|
|
Total other (expense) income
|
|
(556)
|
|
|
752
|
|
|
(5,818)
|
|
|
2,949
|
|
Loss from operations before income taxes
|
|
(798)
|
|
|
(16,820)
|
|
|
(11,000)
|
|
|
(24,101)
|
|
Income tax benefit
|
|
-
|
|
|
-
|
|
|
26
|
|
|
-
|
|
Net loss
|
$
|
(798)
|
|
$
|
(16,820)
|
|
$
|
(10,974)
|
|
$
|
(24,101)
|
|
Comprehensive loss, net of tax:
|
|
|
|
|
|
|
|
|
|
|
|
|
Unrealized gain (loss) on securities
|
|
107
|
|
|
(88)
|
|
|
278
|
|
|
(125)
|
|
Comprehensive loss
|
$
|
(691)
|
|
$
|
(16,908)
|
|
$
|
(10,696)
|
|
$
|
(24,226)
|
|
Net loss per common share - basic
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
|
$
|
(0.01)
|
|
$
|
(0.32)
|
|
$
|
(0.14)
|
|
$
|
(0.46)
|
|
Weighted average Common Stock outstanding - basic (1)
|
|
88,878,371
|
|
|
52,960,212
|
|
|
78,080,858
|
|
|
52,921,542
|
|
|
|
|
(1)
|
Potentially dilutive shares have not been included because to do so would be anti-dilutive.
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/golden-minerals-reports-third-quarter-2016-results-300356398.html
SOURCE Golden Minerals Company