GOLDEN, Colo., May 07, 2020 (GLOBE NEWSWIRE) -- Golden Minerals Company (“Golden Minerals”, “Golden” or the “Company”) (NYSE American and TSX: AUMN) today announced financial results and a business summary for the quarter ending March 31, 2020.
First Quarter Summary Financial Results
- Revenue of $1.2 million and a net operating margin (oxide plant lease revenue less lease costs) of $0.6 million related to the lease of the Company’s oxide plant in the first quarter 2020, compared to a $1.3 million net operating margin realized in the first quarter 2019. (All currency in USD.)
- Cash and cash equivalents balance of $2.2 million as of March 31, 2020 compared to $4.6 million at year-end 2019.
- $3.7 million in additional funding subsequent to March 31, 2020. In April the Company received $0.9 million (net) in conjunction with the signing of an Earn-In Agreement and related Subscription Agreement with Barrick Gold Corporation (“Barrick”), and separately received $2.8 million (net) from an equity offering and private placement of its common shares and warrants.
- Exploration expenses of $1.6 million compared to $0.9 million in the year ago period.
- Net loss of $3.3 million or $0.03 per share in the first quarter 2020, compared to a net loss of $2.4 million or $0.02 per share in the first quarter 2019.
- Related party debt balance of $1.0 million as of March 31, 2020.
First Quarter Business Summary
- Completed a Preliminary Economic Assessment for the Rodeo gold project (Durango State, Mexico), showing a potential pre-tax NPV (8% discount rate) of $24.4 million with a low start-up cost of $1.5 million. Pending receipt of mining permits, mining and processing is planned for Q1 2021.
- Completed an updated Preliminary Economic Assessment for Velardeña, showing a potential pre-tax NPV (8% discount rate) of $85.9 million based on incorporating bio-oxidation processing as the key to achieving robust project economics. No development decision has been made with regard to this project.
- Signed an Earn-in Agreement for El Quevar project with Barrick.
- Completed an initial drilling program at the Sand Canyon gold-silver project (northwestern Nevada), with results pending in the second quarter 2020.
Golden Minerals’ President and Chief Executive Officer, Warren Rehn, notes, “The first quarter of 2020 has marked a significant turning point in our business focus as we gear up for a restart of gold and silver production in Mexico based on our recent preliminary economic assessment for our Rodeo project. The positive results from our updated Velardeña preliminary economic assessment provide an additional potential opportunity for future production in Mexico. Our plan is to continue operating our oxide plant at Velardeña with material from Rodeo after completion of the Hecla lease arrangement at the end of 2020. Placement of our El Quevar project with Barrick allows us to dedicate our efforts to advancing our Mexico assets while retaining tremendous upside potential from El Quevar if Barrick is successful in its exploration program. Our current cash balance gives us the means to move ahead with these plans despite current uncertainties related to the ongoing pandemic.”
Financial Results
The Company reported revenue of $1.2 million in the first quarter 2020 related to the oxide plant lease and costs of approximately $0.6 million related to the services Golden provides under the terms of the lease, for a net margin of $0.6 million. Revenue was lower in the current period due to a contracted amendment permitting a lower variable price per tonne of ore processed beginning in January 2020. During the first quarter 2020, Golden also received $0.4 million in proceeds from the sale of common stock under the existing Lincoln Park Capital Commitment Purchase Agreement (“LPC Program”) and the At the Market Offering Agreement (“ATM Agreement”). Additionally, the Company received $1.0 million in the form of a short-term unsecured loan from a related party, Sentient Global Resources Fund IV, L.P. (“Sentient”). Exploration expenses were $1.6 million in the first quarter, reflecting a drill program conducted at the Sand Canyon project, work at the Rodeo and other projects, and property holding costs and their allocated administrative expenses. El Quevar project expense was $0.2 million in the quarter which includes costs of exploration and evaluation activities, care and maintenance and property holding costs. Administrative expenses totaled $1.2 million in the first quarter 2020. These expenses, including costs associated with being a public company, are incurred primarily by the Company’s corporate activities in support of the Velardeña Properties, the El Quevar project and the Company’s exploration portfolio. Golden reported a net loss of $3.3 million or $0.03 per share in the first quarter 2020 compared to a net loss of $2.4 million or $0.01 per share in the year ago period.
Twelve Month Financial Outlook
The Company ended the first quarter 2020 with a cash balance of $2.2 million and currently expects to receive approximately $2.1 million in net operating margin from the lease of the oxide plant through the end of 2020. Additionally, as noted above the Company received $0.9 million associated with the Barrick Earn-In Agreement and related Subscription Agreement and another $2.8 million related to the April 2020 equity offering and private placement. The Company’s currently budgeted expenditures during the 12 months ending March 31, 2021 are as follows:
- Approximately $2.2 million on evaluation and exploration activities as well as property holding costs associated with the Company’s portfolio of exploration properties located in Mexico, Nevada and Argentina -- including costs at Rodeo, El Quevar, Sand Canyon, Yoquivo and other properties;
- Approximately $1.5 million at the Velardeña Properties for care and maintenance;
- Approximately $1.0 million related to repayment of the Sentient related party loan;
- Approximately $0.7 million for repayment of a refundable deposit to Compañía Minera Autlán that is associated with a terminated 2019 transaction;
- Approximately $3.1 million on general and administrative costs; and
- Approximately $0.5 million related to a decrease in accounts payable and other accrued liabilities.
These projections are current as of the date of this news release but could be negatively impacted if business interruptions related to COVID-19 persist longer than currently anticipated. Additionally, the Company’s currently budgeted expenditures are slightly greater than its resources noted above. Therefore, during the period ending March 31, 2021, the Company intends to take appropriate actions, which may include sales of certain of the Company’s nonstrategic exploration assets, reductions to the Company’s currently budgeted level of spending, and/or raising additional equity capital through sales under the ATM Program, LPC Program or otherwise.
COVID-19 Uncertainties
The Company has undertaken several initiatives in response to COVID-19 related economic and financial market uncertainties. The initiatives are designed to keep the Company’s employees as safe as possible while providing the Company with liquidity during an unprecedented time of financial market disruption and volatility:
- The Company is following World Health Organization protocols and local and governmental rules and recommendations at all its projects and corporate offices. Employees are working remotely wherever possible and the Velardeña Properties (Mexico) have suspended processing activities.
- The Company secured a $1.0 million loan from its largest shareholder, Sentient.
- The Company reached an agreement to extend the repayment schedule of a $0.7 million refundable deposit due to Compañía Minera Autlán.
- The Company secured $2.8 million, net, in an offering and private placement of its common shares and warrants.
Additional information regarding first quarter 2020 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.
Financial Statements
CONDENSED CONSOLIDATED BALANCE SHEETS
(US Dollars, unaudited)
| March 31, | December 31, | ||||||
| 2020 | 2019 | ||||||
| (in thousands, except share data) | |||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 2,212 | $ | 4,593 | |||
| Lease receivables | 311 | 448 | |||||
| Inventories, net | 178 | 231 | |||||
| Derivative at fair value | 39 | 254 | |||||
| Prepaid expenses and other assets | 754 | 669 | |||||
| Total current assets | 3,494 | 6,195 | |||||
| Property, plant and equipment, net | 5,835 | 6,031 | |||||
| Other long term assets | 906 | 1,131 | |||||
| Total assets | $ | 10,235 | $ | 13,357 | |||
| Liabilities and Equity | |||||||
| Current liabilities | |||||||
| Accounts payable and other accrued liabilities | $ | 1,559 | $ | 2,127 | |||
| Deferred revenue, current | 354 | 472 | |||||
| Debt - related party | 1,000 | — | |||||
| Other current liabilities | 1,150 | 1,824 | |||||
| Total current liabilities | 4,063 | 4,423 | |||||
| Asset retirement and reclamation liabilities | 2,979 | 2,839 | |||||
| Other long term liabilities | 437 | 494 | |||||
| Total liabilities | 7,479 | 7,756 | |||||
| Commitments and contingencies | |||||||
| Equity | |||||||
| Common stock, $.01 par value, 200,000,000 shares authorized; 108,457,731 and 106,734,279 shares issued and outstanding respectively | 1,084 | 1,067 | |||||
| Additional paid in capital | 521,788 | 521,314 | |||||
| Accumulated deficit | (520,116 | ) | (516,780 | ) | |||
| Shareholders' equity | 2,756 | 5,601 | |||||
| Total liabilities and equity | $ | 10,235 | $ | 13,357 | |||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(US dollars, unaudited)
| Three Months Ended | |||||||
| March 31, | |||||||
| 2020 | 2019 | ||||||
| (in thousands except per share data) | |||||||
| Revenue: | |||||||
| Oxide plant lease | $ | 1,196 | $ | 1,932 | |||
| Total revenue | 1,196 | 1,932 | |||||
| Costs and expenses: | |||||||
| Oxide plant lease costs | (564 | ) | (597 | ) | |||
| Exploration expense | (1,631 | ) | (855 | ) | |||
| El Quevar project expense | (248 | ) | (315 | ) | |||
| Velardeña care and maintenance costs | (463 | ) | (517 | ) | |||
| Administrative expense | (1,163 | ) | (1,074 | ) | |||
| Stock based compensation | (52 | ) | (564 | ) | |||
| Reclamation expense | (59 | ) | (59 | ) | |||
| Other operating income, net | 4 | 108 | |||||
| Depreciation and amortization | (279 | ) | (274 | ) | |||
| Total costs and expenses | (4,455 | ) | (4,147 | ) | |||
| Loss from operations | (3,259 | ) | (2,215 | ) | |||
| Other expense: | |||||||
| Interest and other expense, net | (27 | ) | (98 | ) | |||
| Loss on foreign currency | (50 | ) | (38 | ) | |||
| Total other loss | (77 | ) | (136 | ) | |||
| Loss from operations before income taxes | (3,336 | ) | (2,351 | ) | |||
| Income taxes | — | — | |||||
| Net loss | $ | (3,336 | ) | $ | (2,351 | ) | |
| Net loss per common share — basic | |||||||
| Loss | $ | (0.03 | ) | $ | (0.02 | ) | |
| Weighted average Common Stock outstanding - basic (1) | 107,247,298 | 95,755,304 | |||||
| (1) | Potentially dilutive shares have not been included because to do so would be anti-dilutive. |
About Golden Minerals
Golden Minerals is a Delaware corporation based in Golden, Colorado. The Company is primarily focused on advancing its Rodeo and Velardeña Properties in Mexico and, through partner funded exploration, its El Quevar silver property in Argentina, as well as acquiring and advancing mining properties in Mexico and Nevada.
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 regarding the Rodeo PEA results and the possibility and timing of future production from the Rodeo property; the Velardeña PEA results and anticipated future operations at the Velardeña properties; statements regarding the transaction with Barrick with respect to the El Quevar project; financial projections, including budgeted expenditures and the anticipated net operating margin from the Velardeña oxide plant lease; projected cash balances and anticipated spending during the 12 months ended March 31, 2021; assumptions regarding raising additional equity capital through sales under the Company’s ATM or LPC programs or otherwise; and the status of business restrictions and other matters related to the COVID-19 pandemic. These statements are subject to risks and uncertainties, including the reasonability of the economic assumptions at the basis of the results of the Rodeo and Velardeña PEAs and technical reports; the Company’s ability to timely obtain the necessary permits for commencement of production at Rodeo; Barrick’s fulfillment of deliverables required in connection with the Earn-In Agreement; the timing duration and overall impact of the COVID-19 pandemic, including the suspension of mining activities in Mexico; lower than anticipated revenue from the oxide plant lease; increases in costs and declines in general economic conditions; changes in political conditions, in tax, royalty, environmental and other laws in the United States, Mexico or Argentina and other market conditions; and fluctuations in silver and gold prices. 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, 2019.
For additional information please visit http://www.goldenminerals.com/ or contact:
Golden Minerals Company
Karen Winkler, Director of Investor Relations
(303) 839-5060
SOURCE: Golden Minerals Company