GOLDEN, Colo., Nov. 6, 2014 /PRNewswire/ -- Golden Minerals
Company ("Golden Minerals" or the "Company") (NYSE MKT: AUMN) (TSX:
AUM) today announced financial results for the quarter ended
September 30, 2014 and provided a
business and operational update.
Company Highlights
- Narrowed net loss to $3.6 million
in the third quarter 2014 from $6.2
million in the third quarter 2013
- Started the sulfide mill and began processing at Velardena on November
3, 2014
- Completed mill improvements at Velardena including overhauling the electrical
system, installing new concentrate filters and refurbishing
flotation cells
- Re-started mining activities at Velardena on July 1,
2014
- Completed the sale of various non-strategic properties and
equipment for proceeds of $1.0
million
- Completed exploration drilling at Los Azules: 7,475 meters in
30 holes
- Completed an initial drilling program at Santa Maria: 2,300 meters in 11 holes
- Completed an underwritten registered public offering and
concurrent private placement for total net proceeds of $7.4 million
Financial Results
The Company reported a net loss of $3.6
million in the third quarter 2014 compared to a net loss of
$6.2 million in the third quarter
2013. The difference is primarily attributable to a net gain
of $0.7 million in the third quarter
2014 on various non-strategic property and equipment sales;
$0.7 million higher interest and
other income; $0.4 million lower
administrative and stock-based compensation expenses; $0.3 million lower Velardena-related expenses; and $0.3 million lower depreciation and
amortization-related expenses.
The Company's cash and cash equivalents balance on September 30, 2014 was $15.0 million compared to $19.1 million on December
31, 2013. The primary use of cash during 2014 was to
fund startup and operations at Velardena ($6.0
million). Additional uses of cash included exploration
expenditures ($3.2 million); general
and administrative expenses ($3.2
million); and maintenance and property holding costs at El
Quevar ($1.2 million).
Expenditures were offset in part by net proceeds of
$7.4 million received from an
underwritten registered offering and private placement of common
stock, and $1.0 million in proceeds
received from non-strategic property sales.
Velardena Properties Update
The Company re-started mining activities at its Velardena
Properties located in Durango State, Mexico on July 1,
2014 and began processing material from the mine on
November 3, 2014. Velardena has been re-opened as a leaner and
lower-cost mine with a new mine plan and new general, mine and mill
managers. Initial activities focused primarily on mining
material from the San Mateo and
Roca Negra veins and on mine
development to access the Terneras vein. Golden Minerals
completed multiple improvements at the sulfide mill, including
installing a new electrical system, new concentrate filters, and
refurbished flotation cells. The Company is testing the new
mill equipment and processes during mill ramp-up in November using
low-grade material that was mined and stockpiled prior to the
start-up of the mill.
By December 2014, the Company
expects the mill to operate at full capacity at an average of 285
tonnes per day (tpd) and to continue at that rate going
forward. Hiring has been accelerated to meet the ramp-up
schedule and by year-end 2014, Golden Minerals expects to employ
approximately 200 people, with about 130 employees under the new
labor union agreement. This is less than one half of the
employees prior to the June 2013
shutdown when the Company was running both sulfide and oxide plants
and processing approximately 500 tonnes per day. The Company
intends to mine from the San
Mateo, Roca Negra and
Terneras veins during the fourth quarter 2014, and mill feed grade
is expected to gradually increase through the second quarter 2015
as new stopes in the mine are developed and as access to the
Terneras vein expands.
After the second quarter 2015, the Company expects to produce
between 250,000 and 300,000 ounces of silver equivalents per
quarter at an average processing rate of 285 tpd of sulfide
material. Silver equivalents include silver and gold but
exclude lead and zinc, and are calculated at 60:1 silver to gold.
The Company expects cash costs between $12
and $15 per payable silver ounce, net of by-product credits,
assuming a price for by-product gold of $1,250 per ounce. "Cash cost per payable
silver ounce net of by-product credits" is a non-GAAP financial
measure defined below in this press release. Additional
details related to Velardena's
restart plan may also be found in the accompanying Form 10-Q.
Exploration Update
The Company completed exploration drilling at its Los Azules
project in Chihuahua State, Mexico
during the third quarter with a project total of 7,475 meters in 30
holes. The final hole (not previously reported) went through
the volcanic section and intersected altered breccias within the
Parral Formation calcareous sediments and the alteration contained
anomalous values in gold and silver. While Golden Minerals considers the volcanic-sediment
contact prospective and is encouraged by the silicified breccias
with anomalous gold values, it has opted to postpone further
drilling at least until a National Instrument (NI) 43-101-compliant
resource estimate is complete. In October the Company
retained the firm of Tetra Tech to complete NI 43-101-compliant
resource estimates on both the Los Azules and Santa Maria vein systems which are expected to
be completed in Q1 2015.
On August 1, 2014, the Company
entered into an agreement giving Golden Minerals the right to
acquire for $1.6 million the
Santa Maria mine, a privately-held
gold and silver property located near the Parral District of
southern Chihuahua State, Mexico
and located approximately 20 kilometers from the Company's Los
Azules project. The agreement calls for payments of $1.6 million over 1.5 years to complete the
purchase. An initial option payment of $35,000 has been made and a $0.5 million option payment is due in
January 2015.
Golden Minerals has recently completed a 2,300-meter, 11-hole
initial drilling program at the Santa
Maria mine. To date the Company has received assays
for seven holes, four of which show strong silver and gold values,
discussed in more detail in its November 4,
2014 press release. If results from the last four
holes are also encouraging, the Company may implement a second
drill program at Santa Maria.
Financing Activity
On September 10, 2014, the Company
completed an underwritten registered public offering and concurrent
private placement for total net proceeds of $7.4 million. The Company sold 3,692,000
units in the registered offering, priced at $0.86 per unit before discount to the
underwriters, with each unit consisting of one share of the
Company's common stock and a five year warrant to purchase 0.50 of
a share of the Company's common stock at an exercise price of
$1.21 per share. The Company
sold an additional 5,800,000 units in a concurrent private
placement to The Sentient Group, the Company's largest stockholder,
at a price of $0.817 per unit, the
same discounted price paid by the underwriter in the registered
offering. Following the completion of the private placement
and the offering, The Sentient Group holds approximately 27.2% of
the Company's outstanding common stock (excluding restricted common
stock held by the Company's employees).
Sale of Assets
During the quarter ended September 30,
2014 Golden Minerals sold 45 mining concessions totaling 770
hectares located in the Zacatecas
District, Zacatecas State, Mexico,
to Capstone Mining Group for US $700,000. The Company also entered into an
option agreement with a private party to sell its 1,100-hectare
Peruvian Otuzco property for US $450,000. At September 30, 2014 Golden Minerals had received
$150,000 under this agreement, with
the remainder payable in 2015 if the option is maintained and
exercised. In addition, the Company sold miscellaneous
surplus equipment located in Argentina for $130,000.
Financial Outlook
At September 30, 2014, the
Company's cash and cash equivalents balance was $15.0 million. The Company expects to spend
approximately $5.5 million on the
following items during the fourth quarter 2014 and to end the year
with a cash balance of approximately $9.5
million:
- $1.0 million for Velardena start-up costs including mining
activities, plant capital and repairs
- $0.8 million of negative gross
margin (defined as revenue less costs of sales; assumes metals
prices of $20 per ounce silver and
$1,250 per ounce gold)
- $0.3 million at the El Quevar
project for ongoing maintenance activities and property holding
costs
- $1.1 million on other exploration
activities and property holding costs
- $1.1 million on general and
administrative costs and $1.2 million
in increased working capital
Additional information regarding third quarter 2014 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. The Company is primarily focused on operations at
its Velardena Properties, the advancement of its El Quevar advanced
exploration property in Argentina,
and the exploration of properties in Argentina and Mexico.
NON-GAAP Financial Measure
Cash costs, after by-product credits, per payable ounce of
silver produced is a non GAAP financial measure that is widely used
in the mining industry. Under generally accepted
accounting principles in the United
States (GAAP), there is no standardized definition of cash
cost, after by-product credits, per payable ounce of silver
produced, and therefore the Company's forecasted cash costs may not
be comparable to similar measures reported by other
companies.
Forecasted cash costs for the Velardena Properties were
calculated based on the mining plan, and include all forecasted
direct and indirect costs associated with the physical activities
that would generate concentrate products for sale to customers,
including mining to gain access to mineralized materials, mining of
mineralized materials and waste, milling, third-party related
treatment, refining and transportation costs, on-site
administrative costs, and royalties. Forecasted cash costs do
not include depreciation, depletion, amortization, exploration
expenditures, reclamation and remediation costs, sustaining
capital, financing costs, income taxes, or corporate general and
administrative costs not directly or indirectly related to the
Velardena Properties. By-product credits include forecasted
revenues from gold, lead, and zinc contained in the products sold
to customers. Cash costs, after by-product credits, were
divided by the quantity of payable silver forecasted to be produced
during the period to arrive at cash costs, after by-product
credits, per payable ounce of silver produced. Cost of
sales is the most comparable financial measure, calculated in
accordance with GAAP, to cash costs. As compared to cash
costs, cost of sales includes adjustments for changes in inventory
and excludes net revenue from by-products and third-party related
treatment, refining and transportation costs, which are reported as
part of revenue in accordance with GAAP.
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 mining and processing
activities at the Velardena Properties, including the anticipated
timing of mill ramp-up, planned testing of sulfide mill
improvements, anticipated processing rates and grade improvements
in mined material and the timing thereof, expected employment
levels, veins to be mined and dilution levels; expected output
amounts of salable and payable silver equivalent ounces; cash costs
per ounce of payable silver net of by-product credits; expected
cash outlay for re-start and ramp-up activities; potential
additional drilling and work at Los Azules and Santa Maria; preparation of resource reports
on the Los Azules and Santa
Maria projects and the timing thereof; anticipated
expenditures in the fourth quarter 2014 and anticipated year-end
2014 cash and cash equivalents. These statements are subject
to risks and uncertainties, including changes in geological,
geostatistical and other interpretations of the information from
drill programs and previous mining experience; reliability of
metallurgical testing results and changes in interpretation;
unfavorable interpretations of geologic information; delays or
problems in mining or processing or the ramp-up of same at the
Velardena Properties; mining or processing problems; mining and
processing costs in excess of those anticipated; unexpected
variations in mineral grades, types and metallurgy; fluctuations in
relevant metal prices; technical, permitting, mining,
metallurgical, recovery or processing issues; problems that delay
or reduce underground mine and stope construction; operational
changes or problems; failure of mined material to meet
expectations; failure to meet expectations regarding mining and
processing rates, saleable metals and cash costs per ounce of
payable silver net of by-product credits; failure of veins mined to
meet expectations; higher than anticipated cash outlays to resume
operations; delays in obtaining resource reports on the Los Azules
and Santa Maria projects;
fluctuations in silver, gold, zinc and lead prices, costs and
general economic conditions; unanticipated expenses including
potential expenses on strategic business opportunities; changes in
political conditions, in tax, environmental and others laws in
Mexico, and financial market
conditions. Golden Minerals Company assumes no obligation to
update this information. 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 Company's Annual Report on Form 10-K for the
year ended December 31, 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)
|
(Unaudited)
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
|
|
2014
|
|
2013
|
|
|
|
|
(in thousands,
except share data)
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 14,955
|
|
$ 19,146
|
|
Trade
receivables
|
|
-
|
|
25
|
|
Inventories
|
|
662
|
|
449
|
|
Value added tax
receivable, net
|
|
1,394
|
|
1,765
|
|
Prepaid expenses and
other assets
|
|
614
|
|
1,091
|
|
|
Total current
assets
|
|
17,625
|
|
22,476
|
Property, plant and
equipment, net
|
|
30,006
|
|
32,375
|
Prepaid expenses and
other assets, non-current
|
-
|
|
30
|
|
|
Total
assets
|
|
$ 47,631
|
|
$ 54,881
|
Liabilities and
Equity
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
other accrued liabilities
|
$ 1,875
|
|
$ 1,365
|
|
Other current
liabilities
|
|
2,755
|
|
4,405
|
|
|
Total current
liabilities
|
|
4,630
|
|
5,770
|
Asset retirement
obligation
|
|
2,635
|
|
2,602
|
Other long term
liabilities
|
|
74
|
|
53
|
|
|
Total
liabilities
|
|
7,339
|
|
8,425
|
Equity
|
|
|
|
|
|
Common stock, $.01
par value, 100,000,000 shares
authorized; 53,022,833 and 43,530,833 shares issued and outstanding
for the respective periods
|
|
530
|
|
435
|
|
|
Additional paid in
capital
|
|
502,701
|
|
494,647
|
|
Accumulated
deficit
|
|
(462,939)
|
|
(448,626)
|
|
|
Shareholder's
equity
|
|
40,292
|
|
46,456
|
|
|
Total liabilities and
equity
|
|
$ 47,631
|
|
$ 54,881
|
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,
|
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
(in thousands,
except share data)
|
Revenue:
|
|
|
|
|
|
|
|
|
|
Sale of
metals
|
|
$
-
|
|
$
500
|
|
$
-
|
|
$ 10,797
|
Costs and
expenses:
|
|
|
|
|
|
|
|
|
|
Costs applicable to
sale of metals (exclusive of
depreciation shown below)
|
|
-
|
|
(517)
|
|
-
|
|
(17,534)
|
|
Exploration
expense
|
|
(1,009)
|
|
(1,024)
|
|
(4,262)
|
|
(3,788)
|
|
El Quevar project
expense
|
|
(489)
|
|
(486)
|
|
(1,244)
|
|
(2,159)
|
|
Velardena project
expense
|
|
(2,034)
|
|
(85)
|
|
(2,034)
|
|
(3,006)
|
|
Velardena shutdown
and care & maintenance costs
|
-
|
|
(2,218)
|
|
(2,457)
|
|
(4,547)
|
|
Administrative
expense
|
|
(782)
|
|
(1,078)
|
|
(3,587)
|
|
(4,608)
|
|
Stock based
compensation
|
|
(181)
|
|
(305)
|
|
(768)
|
|
(1,284)
|
|
Reclamation and
accretion expense
|
|
(50)
|
|
(47)
|
|
(148)
|
|
(135)
|
|
Impairment of long
lived assets
|
|
-
|
|
-
|
|
-
|
|
(237,838)
|
|
Impairment of
goodwill
|
|
-
|
|
-
|
|
-
|
|
(11,180)
|
|
Other operating
income, net
|
|
687
|
|
(31)
|
|
691
|
|
3,615
|
|
Depreciation,
depletion and amortization
|
(751)
|
|
(1,083)
|
|
(2,375)
|
|
(6,180)
|
|
|
Total costs and
expenses
|
|
(4,609)
|
|
(6,874)
|
|
(16,184)
|
|
(288,644)
|
|
Loss from
operations
|
|
(4,609)
|
|
(6,374)
|
|
(16,184)
|
|
(277,847)
|
Other income and
(expense):
|
|
|
|
|
|
|
|
|
|
Interest and other
income, net
|
|
882
|
|
186
|
|
1,763
|
|
509
|
|
Gain (loss) on
foreign currency
|
|
115
|
|
(127)
|
|
108
|
|
(537)
|
|
|
Total other income
(expense)
|
|
997
|
|
59
|
|
1,871
|
|
(28)
|
|
Loss from operations
before income taxes
|
(3,612)
|
|
(6,315)
|
|
(14,313)
|
|
(277,875)
|
|
Income tax
benefit
|
|
-
|
|
104
|
|
-
|
|
47,599
|
|
Net loss
|
|
$ (3,612)
|
|
$ (6,211)
|
|
$ (14,313)
|
|
$ (230,276)
|
Comprehensive
loss, net of tax:
|
|
|
|
|
|
|
|
|
|
Unrealized gain on
securities
|
|
-
|
|
-
|
|
-
|
|
90
|
|
Comprehensive
loss
|
|
$ (3,612)
|
|
$ (6,211)
|
|
$ (14,313)
|
|
$ (230,186)
|
Net loss per
common share – basic
|
|
|
|
|
|
|
|
|
|
Loss
|
|
$
(0.08)
|
|
$
(0.14)
|
|
$
(0.33)
|
|
$
(5.38)
|
Weighted average
common stock outstanding - basic (1)
|
|
45,029,388
|
|
42,857,347
|
|
43,621,634
|
|
42,827,891
|
|
|
(1)
|
Potentially dilutive
shares have not been included because to do so would be
anti-dilutive.
|
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SOURCE Golden Minerals Company